A shorter settlement cycle for securities transactions in the EU

Key points

The EESC:

• welcomes the Commission proposal to amend the Central Securities Depositories Regulation (CSDR) to shorten the settlement period to one business day after the trade. This measure should render EU capital markets more attractive, and remove the costs of misalignment with other jurisdictions;
• supports the proposed timeline, with a target date of 11 October 2027. It provides for a preparatory period within the range of 24 to 36 months indicated by industry participants and trade associations;
• agrees that ‘T+1 settlement’ should be introduced simultaneously for all transferable securities and applied for all types of transactions within the scope of the CSDR;
• does not currently see a need to modify the provisions of the CSDR related to ‘settlement discipline’ but notes that the root causes of settlement failures should be analysed and addressed;
• does not agree with the Industry Committee taking positions that go beyond its mandate, such as exempting securities financing transactions (SFTs) from the ‘T+1’ requirement and to suspend, if required, the CSDR cash penalty regime, during the transition to T+1 move’;
• calls upon the Commission and ESMA to consider the appointment of independent technical and academic experts, where appropriate, to the Industry Committee, as well as representation of retail investors. We recommend appointing technical and academic experts to the Coordination Committee;
• observes that financial market infrastructure in the EU remains fragmented. The migration to ‘T+1’ presents an opportunity for infrastructure operators to explore ways of cooperating more closely, e.g. by developing interoperable technical platforms, sharing assets, or deploying common infrastructures to mitigate the financial burden.