Proposed T+1 amendment to Article 5(2) of CSDR
The first legislative step towards T+1 settlement took place on 12 February 2025 with the publication, by the European Commission, of a draft regulation amending the Central Securities Depositories Regulation (CSDR).
As mentioned by ESMA in its report that recommended a move to T+1 settlement by 11 October 2027, Article 5(2) of the CSDR needs to be amended (with effect from 11 October 2027) to mandate a settlement deadline of no later than T+1. This wouldn't prevent central securities depositories from voluntarily settling transactions on the same date as the trade date (i.e. T+0 settlement) where they have the technological capability to do so.
The Commission's proposed regulation does exactly what ESMA indicated: it provides for a settlement deadline of no later than T+1 from 11 October 2027, but does not amend the rest of Article 5(2) (as the in-scope instruments will not change).
Update on other T+1 steps
This is not the only legal step needed to facilitate the move to T+1. Some changes will be made to the Regulatory Technical Standards on Settlement Discipline (Settlement Discipline RTS) to ensure continued settlement efficiency following the move to T+1. ESMA plans to submit its final report on these changes in Q3 2025. ESMA doesn't plan to recommend changes to the penalty mechanism but may propose "a moderate increase to some of the penalty rates". It will also review the Guidelines on Standardised Procedures and Messaging Protocols once the changes to the Settlement Discipline RTS have been finalised.
Other workstreams are also progressing – details of the overall governance structure for the move to T+1 have been published by ESMA.
UK and Switzerland plan moves to T+1
In parallel with EU developments, the UK's Accelerated Settlement Technical Group has recommended a UK move to T+1 settlement on 11 October 2027, and an 11 October 2027 move to T+1 settlement is also being considered by Switzerland.
Previous Briefings
You can read our previous briefings on the move to T+1 here:
T+1 Update: ESMA recommends move to T+1 on 11 October 2027
Shortening the Settlement Cycle against a backdrop of "instantaneous everything"
US moves to T+1 settlement cycle; ESMA recommendation expected in Q3
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
