ABBL answer to ESMA – Call for evidence on shortening of the settlement cycle

Background

The European Securities and Markets Authority (ESMA) has launched a consultation on reducing the securities’ settlement cycle in European markets, seeking feedback on the expected costs and benefits of a shorter settlement period, and aiming to assess whether any regulatory action is needed ahead of the North American markets’ planned shift to T+1 settlement in May 2024.

ESMA is considering all possibilities for a shortened settlement cycle, including both T+1 and T+0, and is seeking input from various market participants, including market infrastructure firms, investment firms, fund managers, issuers, and retail and institutional investors.

Statement

The ABBL together with its members has responded to the call for evidence and highlighted the following message:

“The European capital markets are facing increasing pressure to transition to a T+1 settlement cycle, in line with other mature capital markets.

This transition is seen as essential for Europe to maintain its competitive edge and attractiveness, a switch to T1+ settlement need to be orchestrated at European level and applicated in the same manner by all European market participants with the help of regulators and industry participants.

While the biggest hurdle, from our perspective, is not the settlement itself, but rather the need to streamline and automate upstream procedures.

To achieve the necessary post-trade efficiency and harmonisation, there will need to be concerted industry-wide cooperation including all stakeholders in the transaction chain, from investors and intermediaries to custodians and market infrastructures.”

For further details, please consult the full answer on the ABBL Membernet.