The European Securities and Markets Authority (ESMA) has proposed that the EU transition to a T+1 settlement cycle by October 2027, coordinating efforts with the UK.
In its final report on this topic, the EU’s financial markets regulator recommends that the shift to T+1 occur simultaneously across all relevant financial instruments, suggesting a specific implementation date of October 11, 2027. ESMA also advocates for a coordinated approach with other jurisdictions in Europe.
Industry stakeholders have emphasized the importance of aligning the UK, EU, and Switzerland to the same settlement cycle to avoid costly delays in securities transactions. Nonetheless, uncertainty existed regarding this alignment. In September, while the EU did not completely rule out a potential postponement to 2028, the UK confirmed its intention to implement the switch by the end of 2027, independent of the timing in other regions.
Andrew Douglas, chair of the UK Accelerated Settlement Taskforce’s T+1 technical group, expressed support for ESMA’s decision, noting, “We have collaborated closely with ESMA over the past year, sharing our advancements, and I am confident that this partnership will continue to grow as we develop joint migration plans.”
ESMA highlighted that the migration to T+1 is expected to bring significant benefits to EU capital markets, including reduced risk, margin savings, and lower costs associated with misalignment with key global jurisdictions. However, the report indicates that this transition will necessitate revisions to the Central Securities Depositories Regulation and the settlement discipline framework. Furthermore, market participants will need to invest significantly in the harmonization, standardization, and modernization required to enhance settlement efficiency.