The European Securities and Markets Authorities (ESMA) has launched a new governance structure to support the transition to T+1 in the EU together with the European Commission and the European Central Bank (ECB), reports the ECSDA. On 22 January, ESMA hosted the T+1 Governance Launch Meeting, unveiling the framework to transition to a one-day (T+1) settlement cycle.
The move aims to align EU markets with global counterparts, reducing counterparty credit risks and addressing inefficiencies caused by discrepancies in settlement cycles. Currently, mismatched timelines between the EU and other major markets create additional costs and operational challenges for investors, issuers, and market infrastructures.
Terms of Reference
At the meeting, Giovanni Sabatini, independent chair of the T+1 Industry Committee, presented the governance structure and outlined the committee’s role in steering the transition. This includes detailed Terms of Reference, a breakdown of technical workstreams, and an initial draft work plan. Sabatini emphasised that the committee’s principles—representativeness, inclusivity, transparency, consensus, and efficiency—are central to its activities.
The governance framework builds on previous industry and regulatory efforts, including the ESMA report from October 2024, as well as insights from UK, US, and Swiss market recommendations. The industry committee will work in coordination with public authorities to ensure the transition is well-timed and aligned across jurisdictions, particularly with the UK and Swiss markets.
Sabatini highlighted the importance of collaboration in this effort, stating that a streamlined move to T+1 would enhance the efficiency, liquidity, and competitiveness of EU financial markets. He underscored the need for continuous, transparent engagement with European authorities to secure the project’s success.