In a report published on Monday 18 November, the European Securities and Markets Authority (ESMA) recommends shortening the settlement cycle for securities transactions in the EU from two days (T+2) to one day (T+1) by October 2027.
ESMA believes that this transition would improve the efficiency and resilience of post-trading processes, thereby strengthening the integration of European capital markets and supporting the objectives of the Savings and Investments Union (see EUROPE 13512/13). Expected benefits include risk reduction, margin savings and better alignment with the world’s leading financial centres.
The US and Canadian capital markets already adopted this reform in May 2024, while the United Kingdom is planning a similar transition by 2027.
However, ESMA points out the challenges of this reform and stresses the need for rigorous planning, close cooperation between European countries and significant investment to ensure this transition’s success.
“The complexity of such a project in a complex trading and post-trading environment (such as the one in EU capital markets) calls for a specific governance to be put in place”, ESMA said in a statement on Monday.
See the ESMA report: https://aeur.eu/f/edx (Original version in French by Bernard Denuit)