On 15 July 2024, the European Securities and Markets Authority (ESMA) published a speech given by its chair, Verena Ross, at the public hearing on shortening the settlement cycle.

In her speech Ms Ross notes that shorter settlement cycles, or T+1, is a topic that keeps growing in importance particularly since ESMA published the results of a call for evidence in March and that the US and other countries have moved to T+1 at the end of May.

Highlights from the speech include:

• Some jurisdictions have already moved to T+1 and the EU’s strong interconnections with some of them, in particular the US, means that many EU stakeholders have to deal with misaligned settlement cycles. This brings complexity, costs, and risks.
• The process to get to T+1 in the EU will be complex. It will likely require changes in the Central Securities Depositories Regulation (CSDR), in existing Level 2 regulations and potentially further regulatory guidance.
• ESMA observes a global trend towards a shorter settlement cycle, with positive experiences from those who are already operating on T+1.
• ESMA will submit its report on T+1 to the European Parliament and the Council of the EU at the latest by mid-January 2025, as required by CSDR Refit. While ESMA finalises it, it will continue its engagement with all stakeholders to ensure everyone is ready for the moment when a decision is taken and the “go” is given.