T+1 in Europe / shortening of the settlement cycle
The settlement cycle for securities will be shortened in the EU. In December 2024 the European and Securtities Markets Authority (ESMA) published a report on the shortening of the settlement cycle in the European Union. Today, securities transactions in Europe are required to be settled at the latest two days after the transaction is made (T+2). A shortening of the settlement cycle implies that settlement of the securities will instead have to take place no later than on the day following the day of the transaction (T+1). In the report, ESMA proposes that the transition to T+1 should take place on the 11th of October 2027.The European Commission is expected to propose an amendment of the Central Securities Depositories Regulation (CSDR) to reflect this. The different market participants in Sweden and across Europe have started to prepare for the transition. US, Canada, and some other markets around the world have already shortened their settlement cycle to T+1.
Within the EU, a governance structure to help coordinate the work will be established, based on discussions between the European Commission, ESMA and some European and global trade associations. The work will, to a large extent, be done by the private sector, but EU public authorities will be part of the governance structure.
According to the proposal in ESMA’s report, the operational timetable for the transition to T+1 will consist of an analytical part in 2025, followed by an implementation phase in 2026, while 2027 will be used for testing to ensure a successful transition.
The SSMA is following the work in Europe closely and is working together with its members to prepare the transition in Sweden. That work also includes cooperation with relevant authorities and stakeholders on the Swedish market, for example Euroclear Sweden, the trading venues, the CCPs, Finansinspektionen, Riksbanken and Riksgälden.
Useful links about T+1
ESMA Assessment of the shortening of the settlement cycle in the European Union – November 2024
EU Task Force High-level Roadmap for Adoption of T+1 in EU Securities Markets – October 2024