European Council - Council Of The European Union - Securities Settlement: Member States Agree Position On Shorter Settlement Cycle

Member states’ representatives (Coreper) today approved the Council’s position (‘negotiating mandate’) on a Commission proposal to shorten the settlement period for transactions in transferable securities. The goal is to shorten the settlement cycle on securities trades, such as transactions in shares or bonds, executed on EU trading venues from two business days (the so-called ‘T+2’) to one business day after the trade date (‘T+1’).

A shorter settlement cycle of one day will make our capital markets more efficient. This is a concrete step to give heed to the calls to boost the EU’s competitiveness.

Andrzej Domanski, Polish minister for finance

Exemption for securities financing transactions

The Council amended the original Commission proposal by exempting securities financing transactions (SFTs) from the settlement cycle requirement. SFTs are financial transactions that allow investors and firms to use assets, such as the shares or bonds they own, to secure funding for their activities.

The Council decided on their exemption from the T+1 settlement cycle because of their non-standardised nature and the non-standardised settlement periods that may need to be agreed to by the parties to such transactions to achieve their objectives.

In order to avoid any risks of circumvention of the T+1 settlement cycle requirement, the exemption should only apply if SFTs are documented as single transactions composed of two linked operations.

Next steps

Following today’s approval of the Council’s negotiating mandate by Coreper, the Council presidency can start interinstitutional negotiations (trilogues) with the European Parliament on this proposal in order to reach a common position.

Once agreed, the new rules will apply from 11 October 2027.

Background

The central securities depositories regulation (CSDR), which entered into force ten years ago, harmonised the securities settlement cycle in the EU at a maximum of two business days after the trade date. Since then, many markets outside the EU have shortened their settlement cycle.

Changing the settlement cycle in the CSDR will prevent a misalignment between EU and global financial markets and maintain the competitiveness of EU capital markets. Improving the efficiency of post-trade services, which includes the settlement of trades, is among the recommendations of the Draghi and Letta reports.