BRUSSELS (CHATNEWSTV) – EU member states agreed Wednesday to support a proposal that would shorten the settlement cycle for securities transactions from two days to one, a move aimed at increasing the efficiency and competitiveness of European capital markets.
The Council of the European Union, through its Committee of Permanent Representatives (Coreper), o Wednesday approved a negotiating mandate on the European Commission’s proposal to shift from the current T+2 cycle — in which trades settle two business days after execution — to a T+1 cycle, where settlement occurs one day after trading.
“A shorter settlement cycle of one day will make our capital markets more efficient,” said Andrzej Domanski, Poland’s finance minister. “This is a concrete step to give heed to the calls to boost the EU’s competitiveness.”
As part of the mandate, member states agreed to exempt securities financing transactions (SFTs) from the new rule due to their complex and non-standardized nature. SFTs allow firms to temporarily use securities as collateral to secure funding. The exemption will only apply when such transactions are documented as single deals made up of two linked operations to prevent circumvention of the T+1 rule.
With the mandate now in place, the Council presidency is authorized to begin interinstitutional negotiations (trilogues) with the European Parliament to finalize the legislation. If adopted, the new rules will come into force on October 11, 2027.
The change updates the Central Securities Depositories Regulation (CSDR), which established a harmonized T+2 settlement cycle across the EU when it came into effect ten years ago. Since then, several non-EU markets — including the United States — have moved to faster settlement timelines.
EU officials say aligning with global standards is crucial to avoiding fragmentation and preserving the competitiveness of Europe’s capital markets. The move is also in line with key recommendations from both the Draghi and Letta reports on strengthening EU financial infrastructure.
