The European Parliament approved the Commission plan to modernise the Union’s financial markets via cutting the time needed to settle securities trades, from 2027 onwards, to one day. The current system stipulates a two-day rule, too slow for today’s requirements.
The plenary session of the European Parliament overwhelmingly supported a report of the ECON Committee on securities settlement in the EU and central securities depositories. The legislation, part of the Commission’s New Plan for Europe’s Sustainable Prosperity and Competitiveness, is to establish a one-day limit for the settlement of securities transactions (T+1).
The chamber approved the report—by rapporteur Johan van Overtfeldt (ECR/BEL)—on Wednesday, 10 September with 612 votes. Seven members voted against and 45 abstained.
MEP also approved a minor change to the report on the Investment and reforms for European competitiveness and the creation of a Capital Markets Union by including a clause reiterating the legislation’s general drift towards sustainable financing. The change won the support of 407 member, with 161 against, and 97 abstentions.
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A decade is too long
The Central Securities Depositories Regulation (CSDR) introduced the T+2 settlement regime a decade ago. It ensured securities transactions in certain secondary markets finalise within two business days of the trade date. This harmonisation has boosted efficiency by cutting risks, speeding up investors’ access to funds or securities and allowing quicker market re-entry.
Yet the T+2 cycle now faces growing pressure to align with global shifts. America and other large jurisdictions have already moved to T+1. ESMA, the European Commission and the ECB had argued that while the EU could technically and legally adopt T+1, its complex financial markets—with diverse actors, systems and currencies—made uncoordinated industry efforts unworkable.
Adopting T+1 should reduce risk, lower margins and cut costs stemming from global mismatches. A coordinated timeline would ensure a smooth transition and prevent fragmentation in the EU’s Capital Markets Union. This would let stakeholders prepare properly to implement T+1 effectively, while allowing tech-ready firms to adopt same-day settlements voluntarily.
Curbing circumvention
In February 2025 the European Commission proposed amending the CSDR to shorten EU securities’ settlement cycles. Stakeholders including the ECB, the EESC and national parliaments have weighed in. On March 10th the Parliament assigned the file to its economic and monetary affairs committee. ECON voted on a draft report on May 20th 2025, adopting the text with 48 votes in favour and four abstentions. The Council backed its position in May.
Interinstitutional talks moved swiftly, culminating in a deal on 18 June 2025. Co-legislators agreed to exempt some securities-financing transactions (SFTs) from the cycle requirement, recognising their role in letting investors and firms use assets such as shares or bonds to secure funding. To curb circumvention risks, the exemption applies only to SFTs structured as single transactions with two linked operations.
The agreement now awaits formal adoption by the Council. Once adopted, the new rules will take effect on 11 October 2027.
