European financial regulators launched their move to eventually introduce a shorter settlement cycle that would align with the T+1 cycle adopted by Canada and the U.S. last year.
The European Securities and Markets Authority (ESMA), along with the European Commission (EC) and the European Central bank (ECB), unveiled a new governance structure to guide the transition to T+1 settlement in the European Union from the current T+2.
The structure includes an industry committee that’s comprised of senior industry personnel; a committee of regulators that will coordinate their work with the industry; and a series of workstreams that will focus on the technical and operational changes that will be needed to facilitate the move to T+1.
The various technical workstreams — which cover areas such as trading, matching, clearing, settlement, securities financing, funding and foreign exchange, asset management, corporate events, and settlement efficiency — will operate under the industry committee. Future workstreams are planned to address legal and regulatory issues.
“The new governance structure has been designed to oversee and manage the operational, regulatory and technological aspects of this transition,” ESMA noted in a release.
The first meeting of the regulatory committee — which is chaired by Verena Ross, chair of ESMA, and includes representatives from the ECB and the European Commission, along with the chair of the industry committee — will take place on Feb. 6.
ESMA has recommended a target date of Oct. 11, 2027 for the transition to T+1 in the European Union.
The European Commission is also currently considering legislative changes to mandate the transition to T+1 settlement.