The EU, alongside the UK and Switzerland, is currently in the process of shortening its settlement cycle from T+2 days to T+1 day. This means that the official transfer of securities to the buyer's account and cash to the seller's account would occur on one business day after the transaction date instead of two. This shift is part of a global trend initiated in February 2023 when the U.S. Securities and Exchange Commission (SEC) announced rule changes to shorten the settlement cycle for most broker-dealer transactions from T+2 to T+1. The new U.S. regulations came into force on May 28, 2024, with Canada and Mexico also joining the transition. 

A shorter settlement cycle offers several benefits, including reduced margin requirements for CCPs, risk mitigation, and cost savings. This move has proven to be technically feasible and could lead to greater automation and standardization of key back-office and post-trade processes, increasing market efficiency. However, it also carries an increased risk of settlement failures and a reduction in settlement efficiency if markets are not well prepared.

In November 2024, ESMA recommended a transition to T+1 in the EU by October 11, 2027.  EU authorities have been actively working on the transition to provide legal certainty and coordination for industry stakeholders across Member States. Alongside its transition date announcement, ESMA also published an extensive report containing valuable industry feedback and outlining the rationale for the EU's shift to T+1. The report included suggestions to amend the Central Securities Depository Regulation (CSDR).

Following these recommendations, the European Commission launched a legislative proposal in February 2025 to amend the CSDR. The European Parliament and Council of the European Union have since agreed upon the details of this legislative file, clarifying the exemption of securities financing transactions (SFTs) from the T+1 requirement, establishing regular reporting on settlement efficiency, and paving the way for the European Commission to consider a temporary suspension of cash penalties for failed settlement if necessary at a later stage. 

Furthermore, to address the fragmented nature of EU markets and ensure readiness for the T+1 requirement by the October 11, 2027 deadline, EU authorities and industry players established the EU T+1 Industry Committee in January 2025. This Committee is responsible for identifying major roadblocks in preparing for T+1 in the EU. Deutsche Börse participated and contributed extensively to these discussions, which resulted in the publication of a high-level roadmap in June 2025 that includes, amongst other topics, key aspects on the future operational timetable under the reduced T+1 cycle. 

Deutsche Börse Group supports all “T+n” settlement cycles and encourages market participants (such as custodians, banks, brokers) to assess their processes and ensure operational readiness for T+1 by the ESMA-proposed deadline. We stand ready to provide any support and guidance necessary for market participants to navigate this transition. We believe this transformation will not only foster greater market alignment but also strengthen Europe’s position as a leading global investment hub while advancing the objectives of the Savings and Investment Union (SIU).

Further information on Deutsche Börse Group's position on this topic can be found in our statements and position papers under Publications. Regular updates on T+1 are also available on Clearstream’s dedicated webpage.