The publication of the EU T+1 Industry Committee’s High-Level Roadmap is a major milestone in the transition of European markets to the shortened settlement cycle, which must be ready for October 11, 2027 – the date that European markets will begin settling stocks, bonds, and other instruments on a T+1 basis.
Market participants have a short span of time to navigate the operational, regulatory, and technical processes that the transition involves. This is especially challenging in the EU, which has a unique and complex market infrastructure landscape.
Ensuring close collaboration and coordination among relevant stakeholders across not only the EU, but also the UK, Switzerland and Liechtenstein, will be essential to ensuring a smooth transition.
EU’s preparedness
So where is the EU currently with its T+1 transition?
The EU Parliament is considering draft laws that will encode T+1 settlement in regulation. Meanwhile, the bloc has launched a multi-pronged approach involving the European Commission, the European Central Bank (ECB), the European Securities and Markets Authority (ESMA), and market participants to prepare for the transition.
As part of this effort, ESMA has established a coordination committee that works closely with the EU T+1 Industry Committee and various technical workstreams dedicated to specific aspects of the T+1 move.
The EU T+1 Industry Committee, led by Giovanni Sabatini, is playing a vital role in the transition including the recent delivery of a roadmap that laid out in detail the key operational, regulatory and technology aspects of the shift to T+1. The roadmap emphasises the importance of post trade automation, standardization and the achievement of STP as critical enablers of settlement efficiency, with a focus on trade matching, sec lending, corporate actions, and more. Specifically, the report highlights the importance of ensuring allocations and confirmations be exchanged by 23:00 on trade date, Place of Settlement (PSET) being enriched at the time of the allocation process, and the need for standards and automation in the standing settlement instructions (SSI) process. That will be followed later this year by a more detailed playbook providing guidance on specific implementation details, as well as a FAQ document in the first half of 2026.
With just over two years to go until the move, the industry should remain mindful of the scale and complexity of the task ahead. Crucially, to ensure readiness, market participants must ensure that their post-trade systems can handle compressed settlement cycles.
The US transition to T+1 in 2024 was deemed a success with no major market disruptions and the delivery of multiple benefits, thanks to advance work across the industry.
With the US now on the T+1 cycle, the industry is achieving an average affirmation rate of 95% or higher by 9:00pm on trade date, and trade fails have remained roughly 2-3% across CNS and Non-CNS activities, on par or better than under the T+2 regime.
A key driver of the success in the US was regulatory certainty, with the Securities and Exchange Commission (SEC) having set a firm deadline for industry transition, allowing firms to work towards it. Furthermore, a detailed playbook, developed in collaboration with the Securities Industry and Financial Markets Association (SIFMA), was also critical and served as a roadmap for US firms as they prepared for the implementation.
Both the UK and EU have established clear timelines, providing a defined framework for firms to structure their preparations.
In the UK, the industry blueprint was published by the UK Accelerated Settlement Taskforce in February 2025. It’s positive that the EU’s timeline is aligned with the UK, Switzerland and Liechtenstein. Most large firms operate globally, so having a unified T+1 migration means they likely won’t have to create specific workflows.
With the EU T+1 Industry Committee’s roadmap now published, EU market participants also have a coordinated process to follow.
Crucially, both the EU and the UK T+1 taskforces have converged strongly around the need for automation of post-trade processes to eliminate bottlenecks in trade settlement and ensure preparedness. With best practice guidance in place and clear timelines set, the EU, UK, Switzerland and Liechtenstein will be able to leverage each other’s work.
Still, due to its set-up, the EU has a more fragmented and federated trading landscape than other jurisdictions. Primarily, while UK and US market participants deal with one central securities depository (CSD) in their jurisdictions, the EU has 30+ CSDs, with variations and divergences in practice.
Some CSDs don’t settle in the ECB’s system while others do, cut-off times for settlement instructions and CSD operating hours differ from country to country, legal and regulatory differences in each member state affect operations, and so on.
The cost of misalignment is high – less efficiency means higher operational costs for market participants, more complex market access across borders, and more possibilities for regulatory arbitrage.
Automation, Standardization and Harmonization Critical to Achieving T+1 Across Jurisdictions
Addressing this fragmentation will require clear regulatory frameworks, an alignment across jurisdictions – such as agreement on precisely which instruments fall into the scope of T+1 – and, as repeatedly emphasized by the bodies overseeing the transition in the UK and Europe, greater adoption of automation. Market participants can help prepare by engaging with regulators, identifying legal and operational barriers, and speeding up post-trade automation projects.
In fact, the move to T+1 could give back offices some ammunition to argue for more resources during budget negotiations with their firms. Firebrand Research’s recently released research paper titled, ‘Tackling Post-Trade Friction: Supporting a Global Shortened Settlement Cycle,’ revealed that T+1 implementation budget for a small buy-side firm is likely to start at $223,000, and the budget for a large global custodian is likely to top $36 million.
The paper also stated that due to market differences across the region, the move to T+1 in Europe will be a more complex and costly process than it was for North America, involving larger teams to deliver a smooth transition working with the higher number of Financial Market Infrastructures, regulators and markets involved. Indeed, automation of post-trade processes, collaboration and alignment of standards such as PSET matching, accurate golden source SSIs and Unique Transaction Identifiers (UTIs) across jurisdictions is critical to achieving T+1 settlement across Europe by October 2027.
Most firms need to transform their clearing and settlement workflows via automation, and that’s especially urgent in the EU given the complexity of the trading landscape.
The path forward
The frameworks for industry and regulatory cooperation across borders are in place. Sabatini’s committee, ESMA’s coordination committee, the UK’s T+1 AST and the Swiss Securities Post Trade Council can work together to align on rules and standards, and prevent market disruptions.
It’s not going to be easy. But if done right, the heavy lift to reach T+1 will be worthwhile. Accelerated settlement means reduced risk, improved liquidity, and aligning the EU with its biggest trading partners. T+1 means more efficient European markets.
By Val Wotton, Managing Director and Global Head of Equities Solutions, DTCC
