The EU is shortening the settlement cycle for securities transactions to T+1 by October 2027. In future, purchases and sales must be settled one business day after the close of trading. The European Securities and Markets Authority (ESMA) is coordinating the transition together with the ECB and the European Commission via a new governance structure and a T+1 Industry Committee.
Regulatory requirements and ESMA regulatory standards
ESMA has published the new RTS, which will take effect gradually from 2026 and support the transition to T+1 by 2027. ESMA's revised regulatory technical standards (RTS) require allocations and settlement instructions to be made on the trading day itself – in machine-readable, standardized formats. Central securities depositories (CSDs) must offer functions such as hold & release and auto-partial settlement on a mandatory basis. In addition, rules for monitoring and reporting settlement fails are being tightened. These requirements reflect only part of the comprehensive RTS.
Impact on market participants
Banks, investment firms, asset managers and custodians are affected. But data providers and IT service providers are also feeling the impact. They need to automate and standardise their post-trade processes to a greater extent. The aim is to reduce risks, free up capital more quickly and make EU capital markets more competitive internationally. Certain transactions, such as securities financing transactions (SFTs) and share certificate transactions, are currently still exempt.
The biggest hurdles in the T+1 transition
The shortened time frame increases the pressure on coordination, allocation, and instructions. Cross-border transactions involve additional risks due to time differences and heterogeneous IT interfaces.
Liquidity and collateral management also becomes more complex, as T+1 reduces the time window for providing liquid funds and collateral.
Our project approach for your T+1 migration
We support the transition to T+1 with a clearly structured approach:
- Status quo analysis: Identification of affected instruments, platforms, and processes.
- Target operating model: Development of several variants with clear implications.
- Feasibility analysis: Evaluation of feasibility and prioritization according to effort, risk, and business impact.
- Implementation planning and rollout: Step-by-step planning including tests and go-live criteria.
To do this, we use tools such as our AI-based Settlemate to quickly identify optimization potential.
Your added value with KPMG
We offer not only expertise on EU and ESMA regulatory standards for T+1 settlement, but also practical solutions. Together, we develop an approach that reduces risks, leverages synergies, and is sustainable in the long term. We will help you implement your T+1 program securely, efficiently, and in compliance with regulations.
Your contacts
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