A European task force has called on the EU, UK and Switzerland to coordinate their implementation of a shortened settlement cycle. The call comes in the wake of the UK’s announcement that it will move to next day settlement (T+1) by 2027, according to funds-europe.com.
The European T+1 Taskforce, which comprises buy and sell-side firms and market infrastructure providers, was established in 2023 with the mission of minimising the impact of the move to T+1.
In its statement, the taskforce welcomed the UK’s plan that stated if the EU commits to T+1 in a timeline that aligned with its own, then simultaneous adoption could be considered.
The discussion of a shortened settlement cycle has come on the back of the US market’s decision to adopt T+1 by May 2024. This has forced the EU, UK and Switzerland to look at aligning to the same cycle or else risk costly lags in securities trades.
“Our shared ambition is for a low-cost, efficient, safe, resilient and integrated post-trade environment which supports globally competitive European securities markets, with high levels of automation and standardisation. We anticipate that alignment of dates will reduce the complexity of implementation projects for firms active across multiple jurisdictions, and minimise scoping issues related to instruments listed, traded and settled across geographical Europe.” – according to The Association for Financial Markets in Europe (AFME).
“The Task Force intends to conduct further analysis of how Europe might transition to T+1, including development of a roadmap for adoption of T+1 in EU securities markets and a potential timeline that would allow enough time for firms to assess the changes they need to undertake, for the industry to conduct comprehensive testing, and for authorities to make the necessary regulatory changes. This analysis will also incorporate lessons learned from the North American migration to T+1 in May 2024. We intend that, once completed, this analysis will be shared publicly.”
“Given the strong support for coordination across jurisdictions, the European T+1 Task Force, and its technical sub-groups, believe there is significant opportunity to work collaboratively with the proposed UK Technical Group and looks forward to doing so.”
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About the European T+1 Taskforce:
The Task Force was established in 2023, to bring together a diverse group of industry stakeholders who would be impacted by a potential move to a default T+1 securities settlement cycle. The Task Force contains representation from industry associations representing all types of market participant, including buy-side, sell-side and market infrastructures.
To date, the Task Force has conducted analysis on the potential impacts and challenges for European players from the North American migration to T+1 taking place in May 2024 and some initial factfinding across different subgroups about impacts of a potential EU move to T+1 in anticipation of ESMA’s work. The Task Force also submitted a joint statement in response to the ESMA Call for Evidence on Shortening the Settlement Cycle in December 2023.
The Task Force is open to participation from any industry association representing securities market participants who would be impacted by T+1.
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