ESMA Proposes Settlement Reforms for T+1 Transition by 2027
The European Securities and Markets Authority (ESMA) has finalized recommendations to amend Regulatory Technical Standards (RTS) on Settlement Discipline, targeting operational efficiency gains across EU financial markets. The reforms aim to streamline the shift to a T+1 settlement cycle by October 2027, reducing administrative overhead for central securities depositories and participants.
Key modifications include same-day trade allocation protocols, machine-readable documentation standards, and mandatory automation of partial settlements and collateral management. Enhanced fail monitoring mechanisms accompany a phased implementation schedule starting December 2026.
Market participants are urged to prioritize these changes in their transition strategies. The proposal now undergoes European Commission review, with adoption decisions expected within three months.
