One year to go for T+1 settlement: the regulatory framework is complete, now let’s make it happen

Key dates

2026-10-16

ESMA publishes the final revised Guidelines on standardised procedures and messaging protocols used between investment firms and their professional clients.

2026-12-07 Deadline

First regulatory milestone: the new allocation and confirmation requirements apply, including mandatory electronic, standardised and machine-readable communication methods, subject to temporary technical-disruption exceptions.

2027-10-11 Deadline

EU securities markets move from T+2 to T+1 settlement; the final phase of the amended settlement-discipline implementation is expected to apply, including settlement-layer process and CSD functionality changes.

Suggested considerations

• Map the firm's transactions, clients, counterparties and settlement venues against CSDR Article 5(2), including the scope for transferable securities traded on an EU trading venue and settling in an EU-registered CSD.
• Assess whether the firm is directly subject to the amended RTS on Settlement Discipline or must implement equivalent controls contractually or operationally for clients and counterparties.
• Complete a gap assessment of allocation and confirmation workflows against the 7 December 2026 requirements for electronic, standardised, international and machine-readable communications.
• Replace manual, oral, email-based or non-machine-readable processes where they are not justified by a temporary technical disruption, and document the disruption, compensating controls, duration and remediation.
• Configure systems to support continuous same-day processing and, taking account of the industry roadmap, completion of allocations and confirmations no later than 23:00 CET on trade date.
• Validate the capture and exchange of critical static data, including place of settlement, BIC, ISIN, MIC and standing settlement instruction data, and establish controls over data quality and versioning.
• Test end-to-end processing with investment firms, professional clients, custodians, brokers, clearing members, CSDs, settlement systems, FX providers and technology vendors rather than testing only internal systems.
• Review client and counterparty agreements, service descriptions, operating memoranda and escalation procedures for the compressed T+1 timetable and cross-border time-zone dependencies.

What changed

The revised ESMA Guidelines on standardised procedures and messaging protocols clarify how investment firms and their professional clients must meet the allocation and confirmation requirements in the amended RTS on Settlement Discipline. From 7 December 2026, firms must use electronic, standardised communication channels and international messaging standards, with machine-readable communication required except during temporary technical disruptions. The broader amended settlement-discipline framework also provides for trade-date processing of allocations and settlement instructions and a phased transition toward settlement-layer capabilities, including hold and release, auto-partial settlement and auto-collateralisation, by 11 October 2027. Industry implementation guidance identifies 23:0

Who is affected

• EU-authorised investment firms executing or arranging in-scope securities transactions
• Professional clients and institutional counterparties of EU investment firms
• Asset managers, investment funds and pension funds transmitting allocations or confirmations
• Banks, broker-dealers, custodians, clearing members, central counterparties, central securities depositories and securities settlement systems supporting in-scope transactions
• Trading venues and other post-trade service providers connected to the EU settlement chain
• Non-EU firms and service providers whose transactions, clients or EU settlement infrastructure links bring them into the scope of the CSDR settlement process

Related regulations

• Central Securities Depositories Regulation (EU) No 909/2014 (CSDR)
• Commission Delegated Regulation (EU) 2018/1229 on regulatory technical standards on settlement discipline
• ESMA Guidelines on standardised procedures and messaging protocols used between investment firms and their professional clients