(Bloomberg) -- Speeding up the European Union’s financial markets should be an urgent priority, the bloc’s regulators said Tuesday, as they look to catch up with peers across the Atlantic.
Halving the time it takes to settle securities transactions from two days to one, via a system called T+1, will bring important benefits and savings, according to a joint statement from the European Securities and Markets Authority, the European Commission and the European Central Bank. Countries including the US moved to T+1 in May.
“It is urgent to act if the EU wants to avoid prolonging and amplifying the negative impacts of the misalignment with major jurisdictions internationally,” according to the statement dated Tuesday. It is “necessary to accelerate every aspect of the technical work needed to pave the way to any future move to T+1 in the EU.”
Accelerating settlement could involve changing operational processes and upgrading technology, as well as making possible adjustments to staffing. But it would realign European markets with the US, where a mammoth industry effort helped ensure a smooth transition.
The authors of the EU statement noted the “high level of interconnectedness between the EU capital markets and those in other jurisdictions in Europe.” The group managing the UK’s T+1 transition has said it plans to move in the latter half of 2027, and officials in Brussels have also signaled that a move by the end of 2027 is possible.
Some market participants believe 2027 is too ambitious a deadline for the EU given the bloc’s complex market infrastructure. Failure for the UK and EU to coordinate could create funding mismatches and misaligned processes across the two closely-linked jurisdictions, likely driving up trading frictions and operational costs.
“A coordinated approach across Europe is desirable, with efforts to reach consensus on the timing of any move to T+1,” according to the EU statement.
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