ESMA Sees “Uneven” T+1 Progress, Reminds Industry of Deadlines

Noting that the implementation of the changes required for a smooth transition to T+1 in EU markets should be a priority for participants, the European Securities and Markets Authority (ESMA) has issued a statement reminding firms of the deadline, noting that readiness surveys had shown “uneven implementation levels” across the bloc’s financial markets, sectors and firms.

“A successful transition to T+1 is a shared effort and goal for the industry and authorities,” ESMA states, adding that it and the national competent authorities “are committed to collaborating at both EU and national levels to reinforce industry awareness and implementation efforts”.

It adds that authorities will also closely monitor firms’ compliance with the related regulatory requirements once they come into effect over the coming months. Warning that “the rules are known”, ESMA says it is preparing proposed amendments to set new requirements, which are particularly relevant to the transition. “These amendments have now been endorsed by the European Commission, and currently are under scrutiny by the European Parliament and the Council,” it points out. “Firms should consider these new requirements in combination with the recommendations of the EU T+1 Industry Committee, and accelerate the technical work needed to prepare for the transition to T+1 settlement on 11 October 2027.”

Under the transition framework, firms will have to be fully compliant with two key deadlines – on 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. This will be followed by the final deadline on 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 and release, and auto-collateralisation.

The latest statement reiterates that automation and standardisation “are essential”, as is ensuring data quality through the use of the correct reference data and standard settlement instructions. It warns that, “Insufficient preparedness among market participants could trigger significant operational and reputational risks for the market participants concerned. 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,” it adds.

Finally, ESMA warns that no one can be ready in isolation. “Assessing your own readiness is not enough: you should check the readiness of your entire ecosystem, up and down the trading and settlement chain, i.e. clients, brokers, custodians, CSD participants, CSDs, CCPs, trading venues, vendors and outsourcing providers,” it stresses. “This will allow your firm to start testing as soon as possible, to identify defects early and reduce the risk of disruption at go-live.”