Good afternoon, and thank you for being here.
Today we propose a change with a significant impact on the efficiency of our capital markets: the shift from a T+2 to a T+1 settlement cycle for securities in the Union by 11 October 2027.
This means an EU market participant selling a share or bond on a Monday will receive the money by Tuesday close, and the buyer will get the share or bond simultaneously.
Shortening the settlement cycle in the EU by one day reduces risks and costs and makes our capital markets more efficient, liquid, and harmonized. This is a crucial step towards the Savings and Investments Union.
Technology has advanced, and settlement systems have evolved, with countries like the US, Canada, Mexico, India, and China now moving to T+1.
The UK and Switzerland are also preparing their transitions.
A shift to T+1 in the EU aligns us with those jurisdictions and avoids substantial costs linked to misalignment.
The shortening of the settlement cycle brings significant benefits to the Savings and Investments Union and contributes to the competitiveness of EU capital markets.
For investors, especially in the retail sector, the benefits are clear. Retail investors will experience faster access to their funds and securities.
A shorter settlement cycle also means cash and securities are freed up more quickly, allowing investors to reinvest sooner and enhancing the liquidity of our capital markets.
One of the most evident benefits of moving to T+1 is reducing counterparty risks. Reducing the settlement cycle to just one day means less risk of unforeseen events.
Concretely, this means a significant reduction in margin requirements for market participants.
This change will not be without challenges. That is why the EU T+1 Governance was established on 22 January.
It sets a clear target date of 11 October 2027 for the full transition to T+1.
Given the high interconnectedness between EU capital markets and those of the UK and Switzerland, a coordinated approach across the European continent makes sense.
T+1 is of mutual interest to the UK, Switzerland, and the EU.
While T+1 is an important step, we must remain aware of other international markets already considering same-day or even instantaneous settlement, the so-called T+0.
Its important we continue progressing, and I encourage market participants to evaluate emerging trends.
In conclusion, the shift to T+1 is a necessary step in promoting efficient financial markets.
Thank you.
https://ec.europa.eu/commission/presscorner/detail/en/ip_25_446