The European Commission is advancing a proposed legislative amendment aimed at transitioning the EU to a T+1 settlement cycle by October 2027.
In November, the European Securities and Markets Authority (Esma) published a report advocating for the simultaneous switch to T+1 for all relevant instruments on 11 October 2027. In response to these recommendations and stakeholder input, the European Commission is proposing a targeted amendment to the Central Securities Depositories Regulation (CSDR) to facilitate this transition.
The proposed date of 11 October 2027 allows market participants adequate time to develop, test, and establish processes and standards to ensure a smooth and effective rollout. The amendment aims to be future-proof, specifying a maximum settlement cycle duration of T+1, while also permitting faster settlements at T+0.
This timeline aligns with the UK and Switzerland’s move to a one-day settlement cycle, addressing industry concerns about potential costly delays in securities trades. Additionally, with countries like China, India, the US, and Canada already adopting T+1, the European Commission emphasizes that making this change will help prevent market fragmentation and the costs associated with misalignment with other global financial markets.
Implementing T+1 is expected to enhance settlement efficiency and bolster the resilience of EU capital markets, contributing to the development of deeper and more liquid markets.
The proposal will be presented to the European Parliament and the Council for consideration and approval. The Association for Financial Markets in Europe has expressed support for the Commission’s swift action to establish the regulatory framework for the switch to T+1, noting that the timeline aligns with that of the UK and Switzerland. AFME plans to continue assisting the EU T+1 Industry Committee in facilitating the successful implementation of this change.