ESMA Proposes Key Changes to Settlement Discipline Framework to Support T+1 Transition

13 October 2025 – The European Securities and Markets Authority (ESMA) has issued its final report recommending significant amendments to the Regulatory Technical Standards (RTS) on Settlement Discipline.

The proposed revisions aim to improve settlement efficiency across the EU, facilitate the shift to a T+1 settlement cycle by October 2027, and ease the operational burden on central securities depositories (CSDs) and market participants.

Key measures include:
• Same-day timing for trade allocations and settlement instructions,
• Machine-readable formats for allocations and confirmations,
• Mandatory functionalities such as hold and release, auto-partial settlement, and auto-collateralisation,
• Enhanced monitoring and reporting of settlement fails,
• A phased implementation starting in December 2026.

The draft amendments have been submitted to the European Commission, which has three months to decide on their adoption. ESMA urges market participants to integrate these changes into their T+1 transition strategies.

Source: European Securities and Markets Authority (ESMA), Final Report on Settlement Discipline RTS Amendments, 13 October 2025.