VIDEO | “The UK actually wanted to move to T+1 a lot sooner than the end of 2027,” said Sachin Mohindra, executive director at Goldman Sachs. “In fact, they were looking at relatively early in 2026.” The shift in timeline – including a concession to allow for some flexibility – was implemented in response to preferences expressed by the industry for a coordinated move with the EU and Switzerland. On stage at the PostTrade 360° Nordic 2024 conference for the session titled “The prospects of T+1 for the UK and EU”, a panel discussed the practicalities of shortening the settlement cycle in the region.

For Chiara Rossetti, Euronext Securities’ senior manager for regulatory and government affairs, there is no question how the organisation would like for T+1 migration to happen. “We support an approach that is coordinated across the markets, across all the different players in Europe. We also support a big bang approach, where all asset classes migrate at the same time.”

As for when that would happen, the organisation is much less decided. “It’s about the readiness of the European market” and it will happen “when the market is ready”.

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Haroun Boucheta, head of public affairs and chief of staff at BNP Paribas Securities Services isn’t so sure the market is going to be ready soon. “Given the magnitude of the project, I don’t think that T+1 in the EU will bring enough benefits,” he said. The margin gains and competitive advantage the industry is expecting to see might not “counterbalance the amount of money that will be put into the project”.

Nevertheless, he acknowledged that T+1 is no longer an “if”, but a “when”, and that it has a role to play in the bigger picture – “It could be a catalyst for other steps in the capital markets union (CMU)”. A part of the commission’s plan to boost growth in the EU is to reduce costs; T+1 is seen as something that could reduce costs because it will force market participants to standardise operations.

He cautioned against making the move too quickly. The transition is a big undertaking, and much of the preparation remains incomplete, including deciding on the products that should be in scope, and the common standards.

A push where needed

Mohindra pointed out that “there is a balance between delaying a harmonised transition in Europe between the UK, EU, and Swiss market, and slowing it down so far that we continue the misalignment we already feel now versus North America”.

He believes that regulatory intervention is necessary to move the things forward. The transition in the US went smoothly because the industry “collectively banded together to work towards a common goal”. “Sometimes, you need regulatory action and enforcement to make that happen – to have that common goal, common set of standard requirements to channel the industry to put the budget and resources behind making such a change.”

Both the UK task force and the European Securities and markets Authority (ESMA) are planning to put out reports related to T+1 by the end of the year, prompting Mohindra to predict that 2025 and 2026 will be all about preparation. “Then hopefully, end of 2027 (for the transition) can still be a realistic conversation.”

Not the same

Boucheta reminded the panel that Europe is not always comparable to the US. For one, “it is a much more fragmented jurisdiction”. “We have no central CSD that would coordinate the T+1 effort in Europe.” Secondly, the need for regulatory intervention in Europe is higher than in the US because “the US could move alone on certain topics”.

“Coordination doesn’t necessarily mean the same date,” he proposed. “it means we need to talk together. We need to try to move in a coordinated way.”

Panellists:
Haroun Boucheta, Head of Public Affairs and Chief of Staff, Securities Services, BNP Paribas
Sachin Mohindra, Executive Director, Goldman Sachs
Chiara Rossetti, Senior Manager Regulatory and Government Affairs, Euronext Securities

Moderator:
Max Chan, Risk Policy Adviser, European Association of CCP Clearing Houses (EACH)

• The consolidated PostTrade 360° Nordic conference, in Stockholm on 4–5 September 2024, came to host 1,200+ delegates and featured 70 sessions.
• Our coverage relating to the event is indexed here.
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