AFME welcomes ESMA Call for Evidence on shortening settlement cycles

AFME welcomes the CfE by ESMA regarding the shortening of settlement cycles in the EU (eventid=23184). To recall, ESMA is considering shortening the securities settlement cycle in the EU from T+2 to T+1 and is soliciting feedback from stakeholders to assess the costs and benefits of this change. The consultation also covers the scope of regulated financial instruments and potential impacts on trading and retail investor access.
In its response, AFME emphasized the importance of not only determining when to move to a T+1 settlement cycle, but also understanding why and how to do so. This decision should be based on a thorough analysis of potential benefits, risks, and costs, taking into account the complexities of EU capital markets. AFME stressed the need for collaboration among industry stakeholders to enhance the safety and efficiency of EU securities markets and expressed AFME’s willingness to contribute to this initiative.
AFME is currently leading the European Task Force to prepare for the transition to T+1 settlement cycles, with a focus on helping members prepare for the US shift to T+1 in 2024 (EventID #14577), active participation in the UK Accelerated Settlement Task Force, collaboration with other EU stakeholders to present a common perspective to EU authorities, and preparing a report on addressing settlement failures and laying the groundwork for T+1.