ESMA proposes key reforms to settlement discipline, supporting the transition to T+1

These changes aim to enhance settlement efficiency across the EU, facilitate the transition to a shorter settlement cycle (T+1) by 11 October 2027 and reduce the administrative burden on central securities depositories (CSDs) and market participants.

The proposed changes are designed to improve operational readiness of the EU financial industry and include:

• Same-day (trade date) timing for trade allocations and settlement instructions.
• Machine-readable formats for allocations and confirmations.
• Mandatory implementation of key functionalities such as hold and release, auto-partial settlement, and auto-collateralisation.
• Updated provisions for the monitoring and reporting of settlement fails.
• A phased-in implementation schedule, beginning in December 2026 and concluding by 11 October 2027, intended to ensure a smooth transition to the new regime.

ESMA strongly encourages market infrastructures, financial intermediaries and their clients to treat these regulatory changes as a central element of their T+1 transition strategy.

Next steps

The draft amendments have been submitted to the European Commission, which has three months to decide on their adoption.

Further information:

Cristina Bonillo

Senior Communications Officer
[email protected]