The European capital market is facing a significant change in the area of ​​securities settlement within the next 2 years. Based on the amendment of the Regulation on improving the settlement of securities transactions in the European Union and on central depositories (CSDR), the transition to a shortened T+1 settlement cycle was set for 11 October 2027.

An important step in preparing for this change was the publication of the final report of the European Securities and Markets Authority (ESMA) on 13 October 2025. In it, ESMA recommended amendments to the regulatory technical standards relating to settlement discipline. The proposed changes aim to ensure a smooth and seamless transition to a shorter settlement cycle while increasing the overall efficiency of the processes associated with trade settlement.

The proposed changes are divided into three groups according to their effective date. The first group of measures will enter into force on 7 December 2026 and focuses mainly on communication between CDCP participants and their professional and retail clients. These mainly include adjustments regarding the provision of allocations, compliance with deadlines and the introduction of mechanisms that support a higher level of automation of settlement processes.

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The second group of changes will enter into force on 1 July 2027 and focuses on monitoring settlement failures. A new methodology for identifying participants with the highest rate of failures is being introduced, the obligation for participants to report the reasons for unsuccessful settlement and more detailed monitoring of failures by place of trade execution. The aim is to better understand the causes of failures and take measures to reduce them.

The third group of changes, effective from 11 October 2027, concerns the functioning of the settlement system itself. The amendments focus on the timeframes for sending settlement instructions to CDCP and on new functionalities of the settlement system. The key innovation is the introduction of mandatory automatic partial settlement, which is intended to significantly contribute to increasing the success of settlement and reducing the risk of its failure.

In 2025, Centrálny depozitár cenných papierov SR, a.s. was actively involved in monitoring the issue of the transition to the T+1 cycle and in change management at the TARGET2-Securities (T2S) level. In 2026, CDCP will continue this activity and, in close cooperation with market participants, will focus on the preparation and implementation of changes that will affect the settlement system and the daily practice of market participants.

Author: Peter Nagy