The European T+1 Industry Task Force has voiced support for a co-ordinated move to T+1 in the EU, acknowledging the benefits of an aligned approach across the entire European region, including the EEA, the UK and Switzerland.
In a new report, the task force stated that this followed a range of views being expressed as to whether the date identified for the UK transition, H2 2027, could also be a feasible implementation date for the EU.
Read more: Inside the UK’s blueprint for the move to T+1 settlement
The task force did, however, emphasise that depending on the exact definition of what regulatory, technical and operational changes will be required, a transition period of between 24 and 36 months will be required to accommodate the complexity of the market infrastructure in Europe.
“The task force is supportive of a move to T+1 in the EU, and recognises the potential benefits in terms of efficiency improvements and risk reduction,” said the task force in a report.
“It is clear that a move to T+1 would be a complex, multi-year undertaking, and requires the collaboration of all industry stakeholders to ensure that we do not introduce new risks or damage the existing efficiency, liquidity and functioning of EU securities markets.”
In the report, the task force also provided a range of further suggestions to ensure the industry can move to T+1 safely and efficiently, including a maximum possible notice period for transition.
For a successful transition, the task force highlighted that public authorities should consider a temporary suspension of cash penalties over the implementation period.
On the same topic, the group added that public authorities should avoid implementing complex changes to the CSDR cash penalty rules in advance of the transition to T+1.
Elsewhere, the task force stated that ESMA should consult as planned on “measures to reduce settlement fails” and make a determination as to whether further regulatory changes are necessary to support enhanced settlement efficiency, and which of these changes, if any, should be sequenced before a move to T+1.
Key findings also included that changes to the daily timetable for trading, clearing, settlement, and ancillary processes will be required to preserve current efficiencies.
In addition, pre-settlement matching was noted as being essential to identify and remediate potential issues as soon as possible.
Established in 2023, the European T+1 Industry Task Force comprises of 21 trade associations involved in European capital markets, bringing together a range of industry stakeholders who would be impacted by a move to T+1 settlement for securities traded and settled in the EU.