T+1

The United States and Canada have decided to shorten the securities settlement cycle to one day (T+1). Starting in April 2024, trades will be settled one day after trading instead of the two-day period that is currently the standard internationally, except for a few Asian platforms. The aim is to make the markets more attractive and less risky.

The United Kingdom and the European Union are also in talks to determine whether to align with the T+1 cycle. AMAFI, the AFG and France Post-Marché are currently conducting a joint investigation of this topic, focusing on the effects of the North American switch on the operation of European markets; and the pros and cons of adopting such a scheme in Europe.

It is important to stress that at this stage of the investigation, and setting aside the interest of adopting the same standards as those used by the main global markets, the technical drawbacks appear to outweigh the benefits. As things stand, unlike highly integrated non-EU markets, Europe’s post-trade segment is highly fragmented, making a reform of this kind extremely hard to execute. However, the US switch to T+1 – and, more importantly, the possibility that the UK may follow suit – seems likely to affect EU markets.