As the US moves to a T+1 settlement cycle from May 2024, the settlement mismatch between the US and EU will raise operational challenges as well as, we suspect, market structure changes. But another direct consequence of the mismatch will be in the enforcement of current EU regulation. In this paper, we identify those scenarios where EU rules will be tested, suggest the scope of that impact and ask policymakers to explore how the regulatory impacts of US T+1 can be mitigated.
In May 2024, the United States, Canada and Mexico moved to a shortened settlement cycle for security transactions. Transactions in those markets now settle on a T+1 basis. The impacts of this change will be felt well beyond those markets given the size of the global investor base in US securities. EFAMA has been engaged in understanding the broader impacts, contributing to the industry’s preparedness, and maintaining a regular dialogue with regulators.
