The list of risk elements is long when the Association for Financial Markets in Europe shares its view with EU authority ESMA in its consultation round about the prospect of a shortened trade settlement cycle. The organisation advocates a coordinated approach across EEA countries (which include the EU member states), Switzerland, and the UK – and only after costs and benefits have been evaluated, in the light of North America’s outcome.
“Moving to a T+1 settlement cycle will be a complex and demanding undertaking for the entire industry, so it is important that feedback is carefully considered before next steps are decided, says post-trade director Pete Tomlinson, in a press release from AFME on Friday.
“Any move to a T+1 settlement cycle must be effected in a way that does not introduce new risks, damage the existing efficiency, liquidity and functioning of EU capital markets, create barriers to investing in the region’s securities markets, or diminish access to capital markets for issuers.”
Ahead of more concrete considerations of a shortened cycle through Europe, AFME currently focuses on issues including the preparation of its members for the US move to T+1 in May 2024, participation in the UK Accelerated Settlement Task Force, and supporting the industry’s struggle with settlement fail rates.