The European Commission is pushing ahead with a proposed legislative amendment that would see the EU migrate to a T+1 settlement cycle by October 2027.
In November, the European Securities and Markets Authority (Esma) published a report calling for the switch to T+1 to occur simultaneously across all relevant instruments on 11 October 2027.
The EC now says that, having considered these recommendations and listened to stakeholders, it is proposing a targeted amendment to the Central Securities Depositories Regulation (CSDR) to enable the move.
The proposal sets 11 October 2027 as the appropriate date for the transition, giving market participants sufficient time to develop, test and agree processes and standards to ensure an orderly and successful rollout.
It is also designed to be future proof, setting a maximum duration for the settlement cycle (T+1) while allowing market participants to settle their transactions faster, at T+0.
The date aligns with the UK and Switzerland's shift to a one-day cycle, something which industry players have called for to avoid the risk of costly lags in securities trades.
With China, India, the US and Canada among those to have already made the move to T+1, the EC says following suit will avoid market fragmentation and costs linked to misalignment between EU and other global financial markets.
T+1 will also help promote settlement efficiency and increase the resilience of EU capital markets while helping to develop deeper and more liquid capital markets.
The proposal will now be submitted to the European Parliament and the Council for their consideration and adoption.
The Association for Financial Markets in Europe says :"We welcome the Commission’s prompt action to provide a regulatory basis for the move to T+1, and that the date of application is aligned with the expected timeline of the UK and Switzerland. AFME will continue to support the EU T+1 Industry Committee to lead the successful implementation of the change."