EUROPEAN UNION: AFME Publishes Paper Discussing on T+1 Settlement in Europe

Monday September 26 2022

On 21^st September 2022, the Association for Financial Markets in Europe (AFME) published a new paper discussing whether Europe should move to a one-day settlement cycle (known as T+1). In Europe, the current settlement cycle for most transactions in equities and fixed income markets is two business days (‘T+2’). The paper follows announcements by the US and other jurisdictions earlier this year of their intention to move to shorter settlement cycles.

The paper, “T+1 Settlement in Europe: Potential Benefits and Challenges” highlights the key benefits of moving to a shorter settlement cycle, including:

 Reduction of risk:

Significant reduction of associated costs

Maintaining global alignment:

Post trade activities compressed into shorter time frame:

Possible increase in settlement fails:

Greater operational complexities for global participants

Securities Lending impact:

AFME’s paper strongly recommends that further cross-industry discussion is required to identify and quantify the benefits and challenges of moving to T+1 settlement. AFME cautions that a successful migration will require coordinated industry effort, from an initial impact assessment through to the development of a detailed implementation plan.

Click on the above link for further information