BME has announced a reform to Spain’s securities settlement system to improve efficiency, align the Spanish market with European standards, and prepare it for the T+1 settlement cycle by 2027.
José Manuel Ortiz
Coordinated by Iberclear, the new settlement model has come into force following the approval of Law 6/2023, on Securities Markets and Investment Services, and Royal Decree 814/2023.
The law removes the obligation for the central securities depository (CSD) to have an information system for the supervision of trading, clearing, settlement, and registration of negotiable securities, as a required component for the traceability of operations on negotiable securities from trading to their final settlement.
The removal of this information system will eliminate the need to simultaneously link the management of the registry with the settlement process, helping reduce operational risks and costs associated with post-trade processes.
This change is expected to increase efficiency in the settlement of securities, simplify operational processes, and reduce the volume of failed operations on their theoretical settlement date.
In addition, the implemented changes will enable the Spanish market to comply with the European standard of matching criteria, known as Party 2.
Adopting this standard facilitates the interoperability of the Spanish market with the rest of Europe, which as a result, aligns settlement processes with European practices.
The Spanish securities market will also be harmonised, improving operational efficiency and increase its competitiveness by reducing barriers to cross-border investment and settlement.
The change will also prepare the Spanish market for the transition to the T+1 settlement cycle, expected to be implemented in Europe in October 2027. This migration claims to reduce risks by improving market efficiency.
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“The implementation of this reform has been a joint effort of the entire industry. The collaboration and commitment of all stakeholders have been key to the success of the project, as well as the involvement and participation of the CNMV,” said José Manuel Ortiz, head securities services a.i., at SIX.
“We are very satisfied with the boost to the efficiency and competitiveness of the Spanish capital markets and their settlement system that this reform brings.”