In response to a Call for Evidence on shortening settlement cycles in the EU, published by ESMA, Pete Tomlison, Director of Post Trade at the Association for Financial Markets in Europe (AFME), said:
“This Call for Evidence is an important step in moving forward the debate on T+1 settlement. Moving to T+1 should not only be a question of “when”, but also “why” and “how”. It is important to ensure that any decision to shorten the settlement cycle is underpinned by a robust qualitative and quantitative analysis of the potential benefits, risks and costs, and also takes account of the unique complexities of EU capital markets.
Any potential move to T+1 will require collaboration from a broad range of industry stakeholders, with the ultimate objective of making EU securities markets safer and more efficient. We welcome the opportunity to contribute to this initiative.”
Source: AFME
ESMA consults on the potential impact of shortening the standard settlement cycle
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, launches a Call for Evidence (CfE) on the shortening of the settlement cycle. Stakeholders are invited to provide their input by 15 December 2023.
The Call for Evidence will help ESMA to assess the costs and benefits of a possible reduction of the settlement cycle in the European Union (EU); and identify whether any regulatory action is needed to smoothen the impact for EU market participants of the planned shortening of the settlement cycle to T+1 in other jurisdictions, such as the US. ESMA seeks input, including quantitative evidence, from all stakeholders involved in financial markets, and not only those in financial market infrastructures.
In particular, ESMA invites market infrastructures (CSDs, CCPs, trading venues), their members and participants, other investment firms, issuers, fund managers, retail and wholesale investors, and their representatives to provide detailed feedback on the questions put forward.
Next steps
ESMA will publish and submit to the European Commission (EC) a feedback report with its main findings in the course of 2024.
ESMA may provide an earlier report to the EC identifying possible regulatory actions to address the impact for EU market participants of the US move to T+1.
Source: ESMA
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