Following the recommendations of the European Securities and Markets Authority (ESMA) (see EUROPE 13527/22), the European Commission proposed on Wednesday 12 February to reduce the settlement cycle for securities transactions from two days to one day. The EU’s transition to ‘T+1’ is scheduled for 11 October 2027.
The securities settlement process includes the verification of transaction instructions, the registration and transfer of securities via central depositories such as Euroclear and Clearstream, and secure clearing by clearing houses (see EUROPE 13570/17).
By reducing the time taken to complete this process, the European Commission’s stated aim is to reduce risk and free up capital tied up in transactions more quickly, thereby boosting trading volumes.
In addition, the initiative aims to contribute to the competitiveness of European capital markets by coordinating with other international markets that have already adopted a ‘T+1’ deadline, notably the North American markets.
“At international level, the direction of travel towards a T+1 settlement cycle is very clear. I am determined to ensure that the EU stays dynamic in this important market area”, said Maria Albuquerque, European Commissioner for Financial Services and the Savings and Investment Union, on Wednesday.
“We will also strive to coordinate with other European countries intending to move to T+1, in particular the United Kingdom and Switzerland, given the close links between our capital markets”, she added.
A proposal to amend the Central Securities Depositories Regulation (CSDR) (see EUROPE 13210/2) will shortly be submitted to the European Parliament and the EU Council. (Original version in French by Bernard Denuit)