ESMA formalises European governance for the transition to T+1 in the European Union

ESMA officially launched the project by creating a dedicated page on its website. The governance proposed in the report has now been finalised and will be described in more detail in the coming days. This step opens the door to the submission of applications for the working groups, the appointment of the persons in charge of the latter having been made upstream.

It is worth recalling that ESMA’s report calls for a T+1 shift in October 2027, in line with the UK. The timeline, also in the November 2024 document, sets at Q3 2025 the end of the phase of defining solutions to meet the technical challenges and considers that their implementation would extend until the end of 2026, thus dedicating the months of 2027 to testing. The various working groups will therefore have to start their work very quickly.

The challenge of moving to T+1 lies in this famous reduction in the time available to prepare and be present at the settlement (approx. 27 hours today vs. approx. 3 hours tomorrow). Industry will need to determine what new rules will allow each type of players (including infrastructures) to be there and how to implement them. However, shortening the settlement cycle should not be accompanied by a deterioration of the current process, which would have human and financial impacts. So, the working groups should not advance October 2027 as the sole compass but focus instead on defining what is needed for a successful move. The choice of solutions must not be limited to what is feasible to meet the deadlines.