On 20 July 2026, the European Securities and Markets Authority (ESMA) published a statement on preparing for the EU T+1 settlement cycle.

Background

On 11 October 2027, the EU financial markets will move to a T+1 settlement cycle. As a result, ESMA sets out that it considers that implementation of the changes required for a smooth transition to T+1 must therefore be a key priority for EU market participants in 2026.

Summary

ESMA sets out the following key points in relation to implementation:

  • Different implementation strategies are possible: Thorough analysis and planning should help market participants making the appropriate choices, considering all specific circumstances. Automation and standardisation are essential, so firms are encouraged to review all their trading and settlement processes and where relevant, to consider new partnerships. Ensuring data quality in a timely manner is also important, such as using the correct reference data.
  • Insufficient preparedness among market participants could trigger significant operational and reputational risks: These can include flawed interdependencies with financial market infrastructures and IT providers, inability to meet client demands, and higher IT and training costs stemming from last‑minute remediation efforts. Ultimately, a persistent inability to meet T+1 settlement deadlines and other requirements could reduce the willingness of counterparties to trade, as they seek to avoid the operational risk of late settlement and associated settlement discipline measures.
  • No one can be ready in isolation: Firms assessing their own readiness is not enough and so firms should check the readiness of their entire ecosystem, up and down the trading and settlement chain, i.e. clients, brokers, custodians, Central Securities Depositary (CSD) participants, CSDs, CCPs, trading venues, vendors and outsourcing providers.

Next steps

ESMA highlights that market participants will have to be fully compliant by the following deadlines:

  • First deadline: 7 December 2026, with the requirements to improve the first post-trade step, the exchange of allocations and confirmations, in terms of timing and through the default use of international communication standards.
  • Final deadline: 11 October 2027, with the requirements to optimise the settlement layer, including sending instructions early enough to securities settlement systems, and the generalisation of certain functionalities in CSDs, such as auto-partial settlement, hold & release, and auto-collateralisation.