European Parliament adopts position for shortening the settlement cycle to T+1 under CSDR

The European Parliament has adopted its position at first reading on the proposed Regulation to amend the Central Securities Depositories Regulation (CSDR), which introduces a shorter settlement cycle for transferable securities transactions within the EU. The proposed Regulation 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. A provisional agreement on the proposal was reached in June between the Council of the EU and the European Parliament, under which they agreed certain securities financing transactions (SFTs) will be exempt from the T+1 settlement cycle requirement. The exemption will only apply to SFTs that are formally documented as single transactions comprising two linked operations, in order to prevent the potential circumvention of the T+1 rule. The next step is for the Council of the EU to formally adopt the agreed text. Once adopted, the Regulation will be published in the Official Journal of the European Union and enter into force on the twentieth day following its publication. It will apply from 11 October 2027.

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