Shortening Settlement Cycle in the EU
CSSF
In its report ESMA proposed a move to T+1 on 11 October 2027, identified as being the optimal date on which the settlement of trades within one business day, for all relevant instruments, should start in the European Union.
The date identified by ESMA should also ensure alignment with the UK in their shift to T+1.
This proposal is intended to increase efficiency and resilience in post-trade processes, facilitating market integration and contributing to the Savings and Investment Union objectives. ESMA’s report outlines potential benefits, including risk reduction, margin savings, and cost reduction due to alignment with other major jurisdictions. However, it also acknowledges challenges, such as amending regulations, harmonising practices, and investing in modernisation. ESMA plans to work with the European Commission and the European Central Bank to address T+1 governance.
The CSSF is aware of the impacts that the shift to T+1 may have on processes, systems, activities, and resources, including staff, and encourages initiating the necessary analysis and technical work to prepare for the EU move to T+1. In particular, concerned entities are invited to assess whether they need to make any major functional or organisational adaptation, to extend the use of current mechanisms and tools, and/or to develop new ones for the purpose of moving to T+1.