For transactions in transferable securities executed on trading venues, the settlement date will be no later than on the first business day after the trading takes place (T+1). Economic and Monetary Affairs (ECON) Committee adopted the text with 48 votes in favor and 4 abstentions. The final text will have to be negotiated with the Council, which has already adopted its position.
Longer settlement periods for transactions in transferable securities increase risks for transaction parties and reduce opportunities for buyers and sellers to enter into other transactions. For those reasons, many third-country jurisdictions have moved, are in the process of moving, or plan to move, to a settlement period of one business day after the trade (T+1).
To address the misalignment with global financial markets and expected increased costs for the EU market participants, members of the European Parliament (MEPs) agreed to shortening the settlement cycle in the Union to T+1. They note that this would not prevent prevent central securities depositories from voluntarily settling transactions on the same date as the trade date (T+0), where technologically feasible.
The European Securities and Markets Authority should monitor the settlement efficiency during the move to T+1 and prepare a report on the shortening of the settlement cycle in the EU. This report should explore the feasibility of shortening the settlement cycle in the future to T+0.