Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 909/2014 as regards a shorter settlement cycle in the Union
Date: 2025-02-12
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: financial control, financial institution, financial instrument, financial legislation, financial transaction, liquidity control, sales agent, securities

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   EUROPEAN COMMISSION  Brussels, 12.2.2025  COM(2025) 38 final 2025/0022 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 909/2014 as regards a shorter settlement cycle in the Union  (Text with EEA relevance) {SWD(2025) 37 final}  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The EU needs to do more to unlock the financing necessary to finance the digital, green and 
social transition as well as to boost growth. Efficiently functioning and deep capital markets 
are  a  necessary  condition  for  achieving  that  goal.  However,  EU  capital  markets  remain 
fragmented despite substantial efforts to integrate them over the years; this fragmentation is a 
substantial impediment to their development. This has been confirmed by a number of reports 
during 2024 including the Draghi report1, and the Letta report2. These reports also underline 
that the competitiveness and attractiveness of EU capital markets, and their ability to deliver 
the financing that the EU needs, can only be achieved if those markets embrace innovation. 

The Savings and Investments Union needs to be built on efficient and safe post-trade services. 
These services play a key role, amongst other things, in the issuance of securities, finalisation 
of trades (settlement), keeping track of the ownership of securities as well as managing  and 
reducing  risks  (clearing).  Post-trade  services  are  essential  for  the  functioning  of  EU  capital 
markets. For these reasons, all aforementioned reports have emphasised that more needs to be 
done to improve the efficiency of post-trade services.  

Each  day,  more  than  EUR  4  trillion  of  securities3  are  settled  in  EU  central  securities 
depositories (CSDs). The longer settlement takes (i) the longer the risks4 faced by buyers and 
sellers last; (ii) the longer investors have to wait to receive the money or the securities they 
are owed – if the settlement doesn’t fail; and (iii) the more that opportunities to enter in other 
transactions  are  reduced.  Fast,  efficient  and  reliable  settlement  is  therefore  an  essential  pre-
condition for developing the Savings and Investments Union. 

It  has  now  been  ten  years  since  the  Central  Securities  Depositories  Regulation  (CSDR)5 
entered into force and harmonised the securities settlement cycle in the EU at a maximum of 
two  business  days  after  the  trade  date  (so-called  ‘T+2’)  for  certain  secondary  markets 
transactions.6  Since  then,  financial  markets  and  technology  have  continued  to  evolve. 

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In  the  Report  on  the  Future  of  European  Competitiveness,  commonly  referred  to  as  “Draghi  report” 
reducing capital market fragmentation is the number one objective set for the Savings and Investments 
Union, p.292. 
The  report  “Much  more  than  a  market”  or  commonly  called  the  “Letta  report”  stresses  the  need  for 
innovative and efficient capital markets to achieve the financing of the green and digital transitions.   
Data generated through the Securities Trading, Clearing and Settlement Statistics Database, European 
Central Bank, for the year 2023 https://sdw.ecb.europa.eu/browse.do?node=9691131. 
A  counterparty  to  a  financial transaction  is  exposed  to different  type  of  risks  such  as  credit,  liquidity 
and market risks between the trade and the settlement of such transaction.  
Regulation  (EU)  No  909/2014  of  the  European  Parliament  and  of  the  Council  of  23  July  2014  on 
improving  securities  settlement  in  the  European  Union  and  on  central  securities  depositories  and 
amending  Directives  98/26/EC  and  2014/65/EU  and  Regulation  (EU)  No  236/2012  (OJ  L  257, 
28.8.2014, p. 1). 
The scope of T+2 settlement in CSDR is transactions in transferable securities referred to in paragraph 
1  of  Article  5  of  CSDR,  which  are  executed  on  trading  venues.  Transactions  that  are  negotiated 
privately but executed on a trading venue, transactions which are executed bilaterally but reported to a 
trading venue or the first transaction where the transferable securities are subject to initial recording in 
book-entry form are not in the scope of T+2 settlement.   Primary markets are not in the scope of T+2 
settlement, as they involve non standardised transactions that require specific processes and monitoring. 
Introducing a mandatory settlement  period for such transactions in parallel to the move to T+1 would 

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Following the EU move at the end of 2014, many jurisdictions followed and moved to shorter 
settlement;  for  example,  the  US  moved  to  T+2  in  2017.  But  innovation  and  the  need  to 
improve the efficiency of settlement, to increase competitiveness as well as to reduce risks to 
financial stability, have meant that efforts have not stopped there. The rest of the world has 
moved  on  since  then:  for  instance  China,  India,  the  United  States  and  Canada,  have  all 
shortened settlement to a maximum of one business day after the trade date (so-called ‘T+1’). 
Significantly,  the  global  shift  to  T+1  is  creating  misalignments  between  EU  and  global 
financial  markets  and  creates  potential  competitiveness  gaps  for  EU  capital  markets.  These 
misalignments will only increase the more countries will move to T+1.  

The  most  recent  review  of  the  CSDR  recognised  these  trends  and  mandated  the  European 
Securities  and  Markets  Authority  (ESMA),  in  close  cooperation  with  the  members  of  the 
European  System  of  Central  Banks  (ESCB),  to  assess  the  appropriateness  of  shortening  the 
settlement cycle in the EU and present a roadmap for how such a move could be carried out. 
ESMA published its report (ESMA Report) on 18 November 20247, recommending that the 
EU move to T+1 no later than 11 October 2027. 8 

Shortening  the  settlement  cycle  in  the  EU  would  significantly  change  the  way  in  which 
markets  function  today,  with  different  impacts  depending  on  the  type  of  stakeholder,  the 
category of transaction and the type of security. Quantifying some of the costs and benefits 
related to the shortening of the settlement cycle in the EU is challenging because of the lack 
of data, but the elements assessed by ESMA suggest that the benefits of a move in terms of 
risk reduction, margin savings9 and the reduction of costs incurred because of inefficiencies 
stemming from the misalignment with other major jurisdictions globally, represent important 
benefits  for  the  Savings  and  Investments  Union.  Moreover,  investment  in  modernising, 
harmonising and improving the efficiency and resilience of post-trade processes that would be 
prompted  by  a  move  to  T+1  would  facilitate  achieving  the  objective  of  further  promoting 
settlement efficiency in the EU, promoting market integration and ultimately the Savings and 
Investments  Union,  and  avoiding a competitive disadvantage  for EU capital  markets,  which 
could  see  traders  favour  other,  more  efficient  markets.  Finally,  maintaining  the  current 
settlement  cycle  in  the  EU  would  contribute  to  further  fragmenting  the  Savings  and 
Investments  Union  as  different  EU  stakeholders  would  continue  to  implement  divergent 
solutions to cope with shorter settlement in most of the world’s capital markets.  

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2024, 

ESMA74-2119945925-1969, 

require a broader analysis as well as market consultations that would not be possible to perform given 
the need for clarity on a transition to faster settlement in the EU. In this respect, during a meeting with 
Member States on 5 September, many Member States were open to exploring an extension of scope, but 
only at a later stage and after having conducted more analysis, to avoid delaying the move to T+1 (see 
Section 4, p.19 of the accompanying Staff Working Document).  
Report  –  ESMA  assessment  of  the  shortening  of  the  settlement  cycle  in  the  European  Union,  18 
November 
https://www.esma.europa.eu/document/report-
assessment-shortening-settlement-cycle-european-union, . 
The  ESMA  Report  assessed  that  the  shift  from  T+2  to  T+1  might  require  at  least  31  months  for  the 
industry  to  prepare  and  make  the  necessary  investments  and  adapt  processes.  It  also  highlighted  the 
urgency to address the misalignment with international capital markets. In light of this, it suggested the 
second Monday of October 2027 as the most adequate moment for the implementation of  T+1, taking 
into account other regular processes that market participants need to perform at different times of the 
year, such as T2S updates or corporate actions processing.  
Margins  savings  is  commonly  used  to  refer  to  the  savings  in  the  provision  of  margin  (collateral 
requirements  to  cover  counterparty risks)  that  market participants  are  exposed  to.  See  ESMA  Report, 
page 11, 37, 38 and Section 7.1.2 of the accompanying Staff Working Document for the benefits of T+1 
settlement related to the reduction of the risk exposures subject to CCP guarantee and therefore of CCP 
margins. 

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Most of the identified costs associated with a move to T+1 would manifest in the short term, 
and  are  related  to  the  investments  needed  to  modernise,  standardise  and  digitalise  various 
steps in the settlement process.  On the other hand, the elements assessed by ESMA suggest 
that the impact of T+1 in terms of risk reduction, margin savings and the reduction of costs 
linked  to  the  misalignment  with  other  major  jurisdictions  globally,  represent  important 
benefits  for the  competitiveness  of EU capital  markets  and for moving towards the Savings 
and  Investments  Union  and  would  ultimately  improve  the  efficiency  of  EU  capital  markets 
and hence maintain their competitiveness at global level. 10 

Settling securities transactions on T+1 is already technically and legally possible in the EU. 
Hence  a  move  to  T+1  could  be  left  entirely  in  the  hands  of  the  EU  securities  industry  to 
coordinate and carry out. However, the higher level of complexity of EU financial markets - 
due  to  the  number  of  different  actors,  systems  and  currencies  involved  -  compared  to  other 
jurisdictions  that  already  moved  to  T+1,  would  make  coordinating  the  process  extremely 
challenging for that industry and would not provide legal or even planning certainty.  

These aspects have also been highlighted in the Joint Statement by ESMA, the Commission 
and the ECB on shortening the standard securities settlement cycle in the EU, published on 15 
October  2024  (‘Joint  Statement’)11.  The  Joint  Statement  pointed  out  the  need  for  the  EU  to 
urgently  act  through  a  coordinated  approach  if  it  wants  to  avoid  prolonging  and  amplifying 
the  negative  impacts  of  the  misalignment  in  settlement  cycles  with  major  jurisdictions 
internationally and ensure an efficient and competitive Savings and Investment Union.    

Therefore,  this  proposal  aims  to  ensure  that  all  stakeholders  have  sufficient  time  to  prepare 
and move to T+1 in a coordinated and timely manner.  

It is hence proposed that the EU move to a shorter settlement cycle requiring the settlement of 
transactions that are currently subject to a settlement cycle in T+2 to take place at the latest on 
the  first  business  day  after  the  trading  takes  place.  This  would  not  prevent  CSDs  that  are 
already technologically capable to do so, to voluntarily settle transactions on the same date as 
the trade date.  

• 

Consistency with existing policy provisions in the policy area 

The  proposal  is  to  amend  CSDR  by  introducing  a  T+1  settlement  cycle  in  the  European 
Union, to improve the efficiency of settlement with the aim of increasing competitiveness and 
reducing risks to financial stability. The proposed legislative changes would contribute to the 
development of a more efficient post-trading landscape in the EU, in line with the objectives 
set  out  under  CSDR  Refit12.  Moreover,  this  proposal  is  in  line  with  the  Commission’s 
objective of building a Savings and Investments Union, to facilitate capital flow across the EU 
to  the  benefit  of  consumers,  investors  and  companies.  The  settlement  of  securities  is  at  the 
core  of  capital  markets.  Fast,  efficient  and  reliable  settlement  is  therefore  an  essential  pre-

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See ESMA Report,  p.88. 
ESMA, Commission and ECB Joint statement on shortening the standard securities settlement cycle in 
the  European  Union:  next  steps,    https://www.esma.europa.eu/sites/default/files/2024-10/ESMA74-
2119945925-2085_EC-ECB-ESMA_High_level_joint_statement_T_1.pdf 
Regulation  (EU)  2023/2845  of  the  European  Parliament  and  of  the  Council  of  13  December  2023 
amending  Regulation  (EU)  No  909/2014  as  regards  settlement  discipline,  cross-border  provision  of 
services,  supervisory  cooperation,  provision  of  banking-type  ancillary  services  and  requirements  for 
third-country  central  securities  depositories  and  amending  Regulation  (EU)  No  236/2012,  OJ  L, 
2023/2845, 27.12.2023. 

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condition  for  developing  the  Savings  and  Investments  Union.  A  shorter  settlement  cycle 
would  enhance  the  attractiveness  of  EU  markets  and  unlock  important  benefits,  notably  by 
achieving  risk  reduction,  margin  savings  and  the  reduction  of  costs  linked  to  misalignment 
with other major jurisdictions globally. 

• 

Consistency with other Union policies 

This  initiative  aims  to  complement  the  broader  Commission  agenda  to  make  EU  capital 
markets more competitive and resilient. A competitive and efficient post-trade environment, 
of  which  the  settlement  cycle  is  a  pivotal  feature,  is  an  essential  element  to  achieve  the 
Savings  and  Investments  Union  objectives.  A  fully  functioning  and  integrated  market  for 
capital will allow the EU’s economy to grow in a sustainable way and be more competitive, in 
line with the strategic priorities of the Commission, focused on creating the right conditions 
for job creation, growth and investment.  

2. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  for  this  proposal  is  Article  114  of  the  Treaty  of  the  Functioning  of  the 
European Union, which is the legal basis for the CSDR. The main objective of the CSDR is to 
increase the safety and efficiency of securities settlement and settlement infrastructures in the 
EU.  This  initiative  proposes  to  revise  the  duration  of  the  settlement  cycle  in  the  Union, 
shortening  it  from  two  to  one  business  day  after  the  trade,  therefore  the  related  legislative 
proposal would be adopted under the same legal basis.  

• 

Subsidiarity (for non-exclusive competence)  

According to the principle of subsidiarity provided in Article 5(3) of the Treaty on European 
Union,  action  at  Union  level  should  be  taken  only  when  the  aims  envisaged  cannot  be 
achieved sufficiently by Member States alone and can, because of the scale or effects of the 
proposed action, be better achieved by the EU.  

The objectives of the CSDR, namely, to lay down uniform requirements for the settlement of 
financial  instruments  in  the  EU,  rules  on  the  organisation  and  conduct  of  CSDs  and  to 
promote safe, efficient and smooth settlement, cannot be sufficiently achieved by the Member 
States  alone,  as  the  co-legislators  acknowledged  in  2014  when  adopting  the  CSDR  and  in 
2023 when adopting CSDR Refit. 

Notably,  the  CSDR  introduced  a  requirement  for  a  mandatory  settlement  period  for  most 
transactions  in  transferable  securities  executed  on  a  trading  venue  in  the  EU,  setting  this 
period at two business days after trading takes place. It is then appropriate that the shortening 
of such settlement period is undertaken through the same legal instrument.  

This  approach  is  further  supported  when  considering  the  fragmentation  of  the  landscape  of 
EU post-trade infrastructures and the differences  in  the Member States’  capital  markets  and 
legal frameworks, which would make a common move to T+1 more challenging, were it not 
coordinated at EU level. The adoption of diverging practices by EU CSDs and trading venues 
with respect to the misalignment of global settlement periods would entail complexities and 
risks,  further  fragmenting  EU  capital  markets  and  creating  unfavourable  conditions  for 
participants and investors. As such, the aim of this initiative to shorten the settlement cycle in 
the Union and thus remove misalignments with the global economy, in view of strengthening 
the competitiveness  and  efficiency of the EU post-trade environment,  cannot  be sufficiently 
achieved  by  Member  States  alone.  Therefore,  by  reason  of  the  scale  of  actions,  these 

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objectives can be better achieved at EU level in accordance with the principle of subsidiarity 
as set out in Article 5(3) of the Treaty on European Union.  

• 

Proportionality 

The  proposal  aims  to  remove  the  misalignment  between  EU  and  international  settlement 
cycles in a proportionate, effective and efficient manner.  

Shortening  the  settlement  cycle  would  provide  a  greater  alignment  with  global  markets, 
significantly streamlining processes for all cross-border market participants and would reduce 
risks  and  costs  for  securities  listed  or  traded  simultaneously  in  T+1  jurisdictions  and  in  the 
EU.  Due  to  the  number  of  different  actors,  systems  and  currencies  involved  in  the  EU 
financial  market,  an  entirely  autonomous  transition  to  T+1  by  the  Member  States  would  be 
challenging,  inefficient and more costly. EU level  action is  necessary to  adequately  achieve 
the  objective  of  introducing  a  shorter  settlement  cycle  in  the  EU  and  unlock  the  related 
benefits. The proposal does not go beyond what is necessary to achieve its objectives. 

• 

Choice of the instrument 

The CSDR is a Regulation and thus it needs to be amended by a legal instrument of the same 
nature.    

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RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

 Given the nature and the urgency of the initiative, which relates to a targeted amendment of 
Article  5(2)  of  CSDR  to  introduce  a  shorter  settlement  cycle  in  the  Union,  and  the  related 
preparatory work, the Commission services did not consider it appropriate to conduct an ex-
post evaluation of existing legislation. During the preparation of the Staff Working Document 
accompanying  this  proposal,  the  Commission  services  have  analysed  the  impacts  of  the 
targeted amendment in light of international developments and have considered the feedback 
received by stakeholders and the analysis set out in the ESMA Report.  

• 

Stakeholder consultations 

The  Commission  has  consulted  stakeholders  throughout  the  process  of  preparing  this 
proposal. In particular through: 

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A roundtable13 organised by the Commission  on  25 January 2024 on moving to  a 
shorter  settlement  cycle  in  the  EU.  Attendees  included  high-level  representatives 
from a broad range of sectors of the industry (buy-side14, sell-side15, retail investors, 
market infrastructures), from leading regulatory authorities, as well as representatives 
of the European Parliament and European Central Bank. Although a range of views 

Roundtable 

on 

shortening 

the 

settlement 

cycle 

in 

the  EU, 

25 

January 

2024 

https://finance.ec.europa.eu/events/roundtable-shortening-settlement-cycle-eu-2024-01-25_en 

The  buy-side  consists  of  the  market  participants  that  will  be  buyers  of  securities.  These  include 
insurance  firms,  mutual  funds,  hedge  funds,  and  pension  funds,  that  buy  securities  for  their  own 
accounts or for investors with the goal of generating a return. 
The sell-side refers to the part of the financial markets that will be seller of securities. The sell-side is 
indeed  involved  in  the  creation,  promotion,  and  sale  of  stocks,  bonds,  foreign  exchange,  and  other 
financial  instruments.  The  sell-side  consists  in  investment  banks  or  in  market-makers  that  provide 
liquidity. 

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were expressed, the majority of participants supported a legislative change to move 
to T+1. They acknowledged that although a move to a shorter settlement cycle can 
bring  benefits,  notably  in  the  long  term,  those  benefits  were  difficult  to  quantify. 
They were of the view that the short-term benefits would predominantly materialise 
through  a  realignment  with  other  jurisdictions,  notably  the  US,  and  collateral 
savings,  while  the  main medium-  to  long-term  benefits  would  be  a  greater  level  of 
automation of the whole settlement chain  and the continued competitiveness of EU 
capital  markets.  The  participants  were  almost  unanimous  about  the  need  for 
coordination  between  European  jurisdictions;  there  was  also  a  consensus  that  a 
misalignment between the EU and the US was not manageable in the long term. An 
informal poll held at the roundtable on the dates of a potential move showed that the 
majority (54%) supported a 2027/2028 move, while 34% supported an earlier move 
and 12% would favour a later move. 

• 

A  Member  States’  experts  meeting  held  on  5  September  2024,  to  discuss  a 
potential  shortening  of  the  settlement  cycle  in  the  EU16.  The  vast  majority  of 
Member  States  expressed  their  support  for  shortening  the  settlement  cycle  to  T+1 
and  considered  that  a  move  to  T+1  would  lead  to  more  efficient  and  timely 
settlement  and  increase  the  attractiveness  of  EU  capital  markets  for  investors. 
Furthermore,  they  considered  that  the  stability  of  markets  would  improve,  and 
liquidity would be more efficiently used due to a reduction of settlement related risks 
and  costs.  Member  States  were  also  of  the  view  that  a  move  should  be  signalled 
through  an  amendment  to  the  CSDR.  They  supported  a  simultaneous  move  for  all 
financial  instruments  rather  than  a  phased  one.  Finally,  they  stressed  that  for  the 
move to T+1 to be successful, thorough preparation, including the development of a 
detailed roadmap, would be essential. 

• 

Collection and use of expertise 

In  preparing  this  proposal  the  Commission  relied  on  external  expertise  and  data  from  the 
following sources: 

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– 

– 

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ESMA: 

the  responses  to  a  3-month  call  for  evidence  on  shortening  the  settlement  cycle, 
launched  by  ESMA  on  5  October  2023  to  which  81  responses  were  received.  The 
feedback received was summarised and published on 21 March 202417;  
the findings from ESMA’s industry workshop held on 4 December 202318; 
the findings from ESMA’s public hearing19 organised on 10 July 2024; and 

the ESMA report under Article 74(3) of CSDR submitted to the Commission on 18 
November 2024. 

The  minutes  of 
register/screen/meetings/consult?lang=en&meetingId=57182 . 
Feedback  statement  –  ESMA  call  for  evidence  on  shortening  the  settlement  cycle,  21  March  2024, 

the  meeting  are  available  at  https://ec.europa.eu/transparency/expert-groups-

https://www.esma.europa.eu/sites/default/files/2024-03/ESMA74-2119945925-
1959_Feedback_statement_of_the_Call_for_evidence_on_shortening_the_settlement_cycle.pdf . 

See ESMA Report.  
ESMA Public Hearing on shortening the settlement cycle, 10 July 2024.  

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• 

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Advisory Group on Market Infrastructures for Securities and Collateral (AMI-
SeCo):  during  its  plenary  meeting  on  26  June  2024,  the  AMI-SeCo,  which  advises 
the Eurosystem on issues related to financial market infrastructures, underlined that 
there  is  a  need  for  a  process  to  (i)  develop  an  implementation  timetable  for  an  EU 
move  to  T+1,  (ii)  monitor  market  preparedness  and  (iii)  identify  areas  where 
solutions  must  be  developed.  A  majority  of  AMI-SeCo  participants  expressed  the 
view  that  the  EU  should  not  wait  for  a  formal  cost-benefit  analysis  and  urged  EU 
decision makers to signal as soon as possible the intention to move as well as a target 
date  for  the  transition.  In  addition,  the  AMI-SECO  called  for  setting  up  as  soon  as 
possible a body to coordinate the move. 20 

European T+1 Task Force: the task force, which includes a wide representation of 
members from the buy-side, sell-side and market infrastructures21, was established in 
July  2023  by  market  participants  to  seek  an  industry  wide  agreement  and  present 
their views on the impacts of the US transition to T+1 on EU stakeholders and on a 
potential move to T+1 in the EU. It was set up following a report by the Association 
for Financial Markets in Europe (AFME) on the potential benefits and challenges of 
moving  to  T+1  in  Europe22.  The  report  concluded  that  many  of  the  benefits  and 
challenges of a US migration to T+1 would also be applicable to European markets. 
However,  given  the  nature  of  European  markets  which,  in  comparison  to  the  US, 
have a multitude of currencies, market  infrastructures,  and actors to  coordinate, the 
implementation would be more complex than in the US. The task force published a 
second report in October 202423, reiterating its support for a move to T+1 in the EU, 
and recognising the potential benefits  in terms of efficiency improvements and risk 
reduction.  They  considered  that  a  move  to  T+1  would  be  a  complex,  multi-year 
undertaking,  which  requires  the  collaboration  of  all  industry  stakeholders  to  ensure 
that no new risks are introduced or the existing efficiency, liquidity and functioning 
of EU securities market are not damaged. In terms of scope, the task force supported 
aligning 
the  CSDR,  albeit  excluding  securities  financing 
transactions24. The task force’s members generally considered that, once a concrete 
transition  date  is  communicated,  a  transition  period  of  between  24  and  36  months 
would be required,  reflecting the complexity of  the market  infrastructure landscape 
in the EU. A range of views were expressed as to whether the second half of 2027, 
the date identified for the UK transition, also could be a feasible implementation date 
for  the  EU.  The  task  force  remained  highly  supportive  of  a  coordinated  approach 
across  the  entire  European  region,  including  the  EEA,  the  United  Kingdom  and 
Switzerland. 

the  scope  of 

to 

20 

21 
22   

See  minutes  of  the  25  June  2024  meeting  of  the  Advisory  Group  on  Market  Infrastructures  for 
Securities and Collateral (Ami-SeCo), item 4 - Potential shortening of the standard securities settlement 
cycle  (T+1).  Link:  https://www.ecb.europa.eu/paym/groups/shared/docs/dbdad-2024-06-25-ami-seco-
meeting-outcome-final.pdf    
See Terms of reference of the EU T+1 Industry taskforce,  https://www.afme.eu/key-issues/t-1. 
AFME  report,  T+1  Settlement  in  Europe :  Potential  Benefits  and  Challenges,  September  2022, 

https://www.afme.eu/Portals/0/DispatchFeaturedImages/AFME_Tplus1Settlement_2022_04.pdf.   

23 

24 

High-level roadmap for adoption of T+1 in EU securities markets – European T+1 Industry Task Force 
October 2024 (https://www.afme.eu/publications/reports/details/high-level-roadmap-for-adoption-of-t1-
in-eu-securities-markets). 
However,  the  ESMA  Report  concludes  that  SFTs  should  not  be  excluded  from  the  current  scope  of 
Article 5(2) of the CSDR. 

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The above has been complemented by input, at times including confidential quantitative and 
qualitative information, provided by financial markets participants during bilateral meetings. 

• 

Impact assessment 

Due  to  the  urgency  to  act  given  international  developments,  Commission  services  opted  to 
prepare  a  Staff  Working  Document  analysing  the  impacts  of  an  EU  move  to  a  shorter 
settlement  cycle.  A  derogation  from  the  requirement  to  produce  a  fully-fledged  impact 
assessment  has  been  granted.  The  Staff  Working  Document  took  into  account  the  ESMA 
Report  assessing  the  costs  and  benefits  of  a  shorter  settlement  cycle  in  the  EU.  The  Staff 
Working  Document  pointed  out  that  greater  automation  and  standardisation  of  core  back-
office and post-trade processes, including a substantial increase in the use of straight-through 
processing, will be needed to enable the move to T+1. It indicated that the magnitude of the 
investment  needs  will  vary  from  one  market  participant  to  another  depending  on  their 
business model, the number of CSDs and CCPs they are connected to and whether previous 
investments have been made to comply with T+1 in other jurisdictions. It also highlighted that 
these  mostly  one-off  costs  should,  over  time,  be  outweighed  by  the  long-term  benefits  of 
lower  counterparty  and  market  risks,  more  efficient  and  timely  settlement  and  increased 
attractiveness  of  EU  capital  markets  for  investors.  It  concluded  that  given  the  fragmented 
nature of EU capital markets, coordination and cooperation of market participants is not only 
useful but essential to ensure a smooth move to T+1.  

• 

Regulatory fitness and simplification 

The  initiative  aims  to  enhance  the  competitiveness  and  attractiveness  of  the  EU  post-trade 
landscape  by  introducing  a  shorter  settlement  cycle  in  the  EU.  As  such,  it  does  not  aim  at 
reducing  regulatory  burdens  and  costs  per  se.  Costs  associated  with  a  move  to  T+1  would 
manifest  in  the  short  term,  related  to  the  investments  needed  to  modernise,  standardise  and 
digitalise  various  steps  in  the  settlement  process.  These  costs  would  be  borne  by  financial 
entities.  However,  the  expected  benefits,  such  as  increased  automation  and  efficiency,  risk 
reduction,  lower  margin  requirement  and  elimination  of  misalignment-related  costs  and 
frictions,  should,  over  time,  largely  outweigh  the  mostly  one-off  costs  stemming  from 
necessary investments that a move to T+1 would entail.  

• 

Fundamental rights 

The EU is committed to high standards of protection of fundamental rights and is signatory to 
a broad set of conventions on human rights. In this context, the proposal is not likely to have a 
direct  impact  on  these  rights,  as  listed  in  the  main  United  Nations  conventions  on  human 
rights, the Charter of Fundamental Rights of the European Union which is an integral part of 
the EU Treaties, and the European Convention on Human Rights. 

4. 

BUDGETARY IMPLICATIONS 

The proposal will have no implications for the budget of the Union. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

This  proposal  does  not  require  an  implementation  plan  or  monitoring,  evaluation  and 
reporting arrangements.  

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• 

Detailed explanation of the specific provisions of the proposal 

Article  1  introduces  a  targeted  amendment  to  Article  5(2)  of  the  CSDR,  requiring  that  for 
transactions in scope of Article 5(2)25 , the intended settlement date shall be no later than on 
the first business day after the trading takes place. This proposal does not amend the scope of 
application of Article 5(2).  

25 

The transactions in scope of Article 5(2) are transactions in transferable securities referred to in Article 
5(1)  which  are  executed  on  trading  venues,  with  the  exception  of  transactions  which  are  negotiated 
privately but executed on a trading venue, transactions which are executed bilaterally but reported to a 
trading  venue  or  the  first  transaction  where  the  transferable  securities  concerned  are  subject  to  initial 
recording in book-entry form. 

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2025/0022 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EU) No 909/2014 as regards a shorter settlement cycle in the 
Union 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank26, 
Having regard to the opinion of the European Economic and Social Committee27,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

Article  5(2)  of  Regulation  (EU)  No  909/201428  regulates  the  settlement  period  for 
most  transactions  in  transferable  securities  executed  on  trading  venues.  With  certain 
exceptions,  the intended settlement date for such transactions is to be no later than on 
the second business day after the trading takes place. Such period is referred to as the 
‘settlement cycle’. The requirement for the settlement to take place at the latest on the 
second business day after the trading takes place is referred to as ‘settlement cycle in 
T+2’, or, simply, ‘T+2’.  

Longer settlement periods for transactions in transferable securities increase risks for 
transaction parties  and reduce opportunities for  buyers and sellers to  enter into other 
transactions.  For  those  reasons,  many  third-country  jurisdictions  have  moved,  are  in 
the  process  of  moving,  or  plan  to  move,  to  a  settlement  period  of  one  business  day 
after  the  trade  (‘T+1’).  The  global  shift  to  shorter  settlement  periods  is,  however, 
creating  misalignments  between  Union  and  global  financial  markets.  Those 
misalignments will only further increase when more countries move to T+1 settlement 
and increase the cost caused by such misalignments for Union market participants. 

26 
27 
28 

OJ C…. 
OJ C … 
Regulation  (EU)  No  909/2014  of  the  European  Parliament  and  of  the  Council  of  23  July  2014  on 
improving  securities  settlement  in  the  European  Union  and  on  central  securities  depositories  and 
amending  Directives  98/26/EC  and  2014/65/EU  and  Regulation  (EU)  No  236/2012  (OJ  L  257, 
28.8.2014, p. 1). 

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(3) 

(4) 

(5) 

(6) 

In its report on the appropriateness of shortening the settlement cycle in the European 
Union,  published  on  18  November  2024,  the  European  Securities  and  Markets 
Authority concluded that shortening  the settlement  cycle in  the Union to T+1 would 
significantly reduce risks in the market, in particular with respect to counterparty and 
volatility  risks,  and  free  up  capital  no  longer  required  to  cover  margin  calls.  T+1 
would also enable Union capital markets to keep up with the evolution of other global 
markets, eliminating the costs associated with the current misalignment of settlement 
periods. It would also contribute to further harmonisation of corporate event standards 
and market practices in the Union and more generally to the competitiveness of Union 
capital markets. The Commission shares those conclusions. 

It  is  therefore  appropriate  to  introduce  a  targeted  amendment  to  Regulation  (EU) 
909/2014 in order to shorten the current mandatory settlement cycle to one day after 
the  trading  takes  place.  Such  shortening  of  the  settlement  cycle  would  not  prevent 
central  securities depositories from  voluntarily settling transactions on the same date 
as the trade date, where technologically capable.  

Regulation (EU) No 909/2014 should therefore be amended accordingly. 

Since the objectives of this Regulation, namely to introduce a shorter settlement cycle 
in the Union, cannot be sufficiently achieved by the Member States but can rather, by 
reason  of  their  scale  and  effects,  be  better  achieved  at  Union  level,  the  Union  may 
adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 
of the Treaty on European Union. In accordance with the principle of proportionality, 
as set out in that Article, this Regulation does not go beyond what is necessary in order 
to achieve those objectives. 

(7) 

To ensure that all relevant stakeholders involved are sufficiently prepared and able to 
move to T+1 settlement in a coordinated and timely manner, the date of application of 
this Regulation should be deferred.  

HAVE ADOPTED THIS REGULATION: 

Article 1 

Amendment to Regulation (EU) No 909/2014 

In Article 5 of Regulation (EU) No 909/2014, paragraph 2 is replaced by the following:  

‘2.  As regards transactions  in transferable securities  referred to  in  paragraph 1 
which  are  executed  on  trading  venues,  the  intended  settlement  date  shall  be  no 
later than on the first business day after the trading takes place. That requirement 
shall  not  apply  to  transactions  which  are  negotiated  privately  but  executed  on  a 
trading  venue,  to  transactions  which  are  executed  bilaterally  but  reported  to  a 
trading venue or to the first transaction where the transferable securities concerned 
are subject to initial recording in book-entry form pursuant to Article 3(2).’. 

Article 2 

Entry into force and application 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union.  

It shall apply from 11 October 2027. 

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This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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