EU provisional agreement on proposal for shortening the settlement cycle to T+1 for CSDR

The Council of the European Union and European Parliament have reached a provisional agreement to amend the Central Securities Depositories Regulation (CSDR) to introduce a shorter settlement cycle for transferable securities transactions within the EU. The European Commission welcomed the agreement in a press release. The CSDR amendment will reduce the settlement period from two business days after trading takes place (T+2) to one business day (T+1), with the aim of promoting settlement efficiency, improving the liquidity of capital markets and eliminating costs linked to the misalignment of settlement cycles between the EU and other jurisdictions. The co-legislators agreed, however, to exempt certain securities financing transactions (SFTs) from the T+1 settlement cycle requirement. To prevent potential circumvention of the T+1 requirement, the exemption will only apply where SFTs are formally documented as single transactions comprising two linked operations. The provisional agreement requires approval by both co-legislators before going through the formal adoption procedure. Following adoption, the proposed regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union and will apply from 11 October 2027.

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