The European Commission has proposed moving to a one-day (T+1) settlement cycle for securities transactions across the EU, shortening the current two-business-day (T+2) standard. This marks a significant shift in European capital markets.

The Cyprus Securities and Exchange Commission (CySEC) has already issued a circular to local market participants, outlining the expected changes and their implications. The circular was addressed to Cyprus Investment Firms (CIFs), Alternative Investment Fund Managers, trading venues, and Central Securities Depositories, CyprusMail reported.

EU Targets T+1 Settlement, CySEC Responds

The proposal follows the final report from the European Securities and Markets Authority (ESMA) and involves amendments to the regulation on central securities depositories (CSDR). The Commission has set 11 October 2027 as the target date for the transition.

The proposed T+1 cycle would apply to all EU transactions in transferable securities, including shares and bonds traded on EU trading venues. According to CySEC, the change aims to enhance post-trade efficiency and market resilience.

CySEC stated: “The move to T+1 aims to strengthen the efficiency and competitiveness of post-trade financial market services in the EU.” The Commission also highlighted that the change could reduce costs and risks, while helping to prevent market fragmentation and misalignment with global standards.

You may want to read at financemagnates.com : ESMA to Upgrade Systems as EU Aims for T+1 Settlement.

EU Transition Triggers CySEC Governance Changes

Given the complexity of the transition, a governance structure will be established. It will include a T+1 coordination committee, an industry committee, and several workstreams to define the processes and standards for the shift.

Separately, CySEC informed CIFs of an amendment to ICT and security risk guidelines issued by the European Banking Authority. The amendment, published on 11 February 2025, reflects new EU-wide requirements introduced under the Digital Operational Resilience Act (DORA), effective since mid-January 2025. As a result, certain sections of the earlier guidelines have been removed.

CySEC clarified that CIFs are no longer required to comply with the previous framework and has withdrawn earlier circulars that aligned local rules with the now-removed provisions.