A clarification has emerged on how settlement cut-off times should be interpreted when Europe moves to a T+1 settlement cycle on 11 October 2027. The clarification was shared by Giovanni Sabatini, chair of the EU T+1 Industry Committee, on LinkedIn following discussions at a recent meeting of the EU T+1 Coordination Committee.
According to Sabatini, concerns had been raised by investors, particularly those based in Asia, about the European Securities and Markets Authority’s draft regulatory technical standards on Settlement Discipline. Article 5(5) requires central securities depositories to ask participants to submit settlement instructions as soon as possible and no later than 23:59 CET on trade date.
An ESMA representative explained at the meeting that this requirement is intended to encourage earlier submission of instructions. It is not designed to force CSDs to reject instructions sent after 23:59, nor to trigger cash penalties for late submission.
Alignment with T2S operations
The European Central Bank added that this interpretation is consistent with the Target2-Securities operating timetable. Instructions submitted after 23:59 can still settle on T+1, either in the second night-time netting cycle or during real-time settlement. ESMA is now formalising this clarification, Sabatini said, with meeting minutes published on ESMA’s website.
