Following confirmation from the European Commission that the principle of T+1 has been accepted, the Autorité des Marchés Financiers (AMF) and the Banque de France have called for a “well-coordinated and efficient transition” for securities transactions across the EU.
Both organisations have emphasised the importance of cross-border cooperation in the transition, highlighting Switzerland and the UK as key jurisdictions due to their interdependency with EU markets.
A two-phased approach to the transition is advised. First, all trades on securities in a T+2 environment should be confirmed and allocated by the end of the trade day – a process that will require operational and technical upgrades across the industry, the firms state. Then, T+1 can be adopted, “with a satisfactory level of trade confirmations on the trade date”.
The T+1 framework should not be limited to regulatory aspects, they added, advocating for regulatory and economic incentives to be included.
The organisations concluded: “This comprehensive strategy aims to ensure a smooth and effective transition to the T+1 settlement cycle, safeguarding the stability, efficiency and competitiveness of European financial markets.”
Commenting on the announcement, Susan Yavari, regulatory policy advisor for capital markets at EFAMA, told Global Trading: “It’s good to see the French authorities calling out their priorities at this point.
“[It is] critical that we maintain alignment with the UK. A joint migration is feasible, we need to avoid reinventing the wheel and leverage on existing work and even share resources. The UK is still on CSDR, albeit as onshored UK legislation – it is still fundamentally the same framework. Europe should not have a misaligned system vis-a-vis other jurisdicitons for any longer than it has to.
“Most fundamentally, the short AMF/BdF paper points to an intelligent use of resources and path forward, while still delivering a safe and well-controlled migration. We should seize that.”
©Markets Media Europe 2024
