T+1 Settlement

The European Union and the United Kingdom are getting ready to switch to T+1 settlement in October 2027. As part of ongoing discussions on this topic within the European Commission, AMAFI met with Jennifer Robertson, Head of Unit, Financial Market Infrastructure at DG FISMA, to raise two key issues for its members:

• Representing the whole market ecosystem in the project’s governance structure: AMAFI stressed that governance must reflect the diversity of market participants, not only in terms of geography but also of size and business sector. It also underlined the challenge that T+1 represents for mid-sized firms. These views, shared by other stakeholders, seem to have been taken on board, because the final governance arrangements feature more diverse representation than was originally proposed. AMAFI Chairman Stéphane Giordano sits on the Industry Committee on behalf of the European Forum of Securities Associations, while several AMAFI members belong to the working groups that are open to interested experts.
• Penalties under the Central Securities Depositories Regulation: the CSDR’s penalty system, which has no equivalent anywhere in the world, could magnify the difficulties that emerge during the move to T+1. This is especially true for market segments with a microstructure that does not yet support optimal settlement, such as exchange-traded funds or illiquid bonds. As a precaution, it should be possible to suspend payment of these penalties if need be. Ms Robertson said that talks were underway on this topic but expressed concerns about the signal that might be sent to market participants on T+1 compliance. AMAFI does not share these apprehensions since the industry is tightly focused on making the transition to T+1 a success. Further, US experience and Britain’s initiative prove that a penalty mechanism is not prerequisite for successful migration.