top of page

CySEC Signals Major Shift: EU Securities Market Moves to T+1 Settlement Cycle

  • Antonis Hadjicostas
  • 2 days ago
  • 2 min read
ree


The Cyprus Securities and Exchange Commission (CySEC) has issued Circular C741 to regulated market participants, signalling an important evolution in the post-trade landscape of European securities markets. This development aligns Cyprus with broader EU policy aimed at boosting market efficiency, reducing risk, and harmonising settlement practices with global standards.


What’s Changing?


Under the updated EU framework, specifically Regulation (EU) 2025/2075 amending the Central Securities Depositories Regulation (CSDR), the standard settlement cycle for most securities transactions in the EU will be shortened from T+2 to T+1.


That means trades in equities, bonds, and other transferable securities executed on trading venues must be settled no later than one business day after the trade date. This is a significant acceleration compared to the traditional two-day cycle.


Transition Timeline

  • Regulation Entry into Force: 3 November 2025

  • Effective Application Date: 11 October 2027


Why T+1 Matters


The move to T+1 settlement is driven by three key objectives:


  1. Operational Efficiency: Shorter settlement cycles reduce the time between trade execution and settlement, streamlining the post-trade process.


  2. Risk Reduction: By cutting the exposure window, market participants face lower counterparty and settlement risk - a major benefit during periods of market stress.


  3. Global Alignment: Many leading markets outside the EU, including the United States, already operate on a T+1 basis, and this shift harmonises European practices with international norms.


What Transactions Are Covered?


The T+1 requirement applies broadly to transferable securities executed on trading venues.


However, the regulation clarifies that certain trades remain outside its scope, such as:

  • Privately negotiated trades executed on trading venues

  • Bilateral trades reported to trading venues

  • Initial book-entry transactions under specific conditions

  • Certain securities financing transactions (SFTs)

  • Margin lending (as these are not considered transactions in transferable securities)


Practical Implications for Firms


Regulated entities, including Cyprus Investment Firms (CIFs), UCITS, AIFs, trading venues, and central securities depositories, are now encouraged to begin their readiness preparations. According to the Circular:

Entities are urged to review the potential impact of the transition on internal systems, operational workflows, liquidity and treasury frameworks, client onboarding practices, and cross-border arrangements.

This early engagement is especially important, as technological and procedural adjustments will be necessary to comply with the tighter settlement timeline.


Industry Collaboration: T+1 Readiness Survey


In addition to the regulatory timeline, the EU T+1 Industry Committee has launched a readiness survey to gauge the preparedness of market participants. CySEC’s Circular strongly encourages regulated entities to participate in this exercise in order to help identify challenges and operational bottlenecks ahead of implementation.


What’s Next?


As the countdown to October 2027 begins, market participants must take proactive steps to adapt:

  • Upgrade systems to support T+1 clearing and settlement processes.

  • Assess liquidity management practices to accommodate faster cash and securities flows.

  • Coordinate across departments to ensure seamless transition.


The shift to T+1 is more than a technical tweak; it represents a structural enhancement to EU financial markets that promises greater resilience and efficiency. For Cyprus-based firms under CySEC supervision, early planning and active engagement with the T+1 readiness initiatives will be key to complying with this new chapter in European capital markets.

 
 

The material reflected in our website, including Blog material, is for informational purposes only and does not constitute legal advice, consulting, or any other professional advice. Please seek independent professional guidance for your specific needs.

​

All rights reserved. No part of this work may be reproduced, stored in a retrieval system of any nature, or transmitted, in any form or by any means including photocopying and recording, without the prior written permission of the ENAH Services Ltd. The reproduction or transmission of all or part of the work, whether by photocopying or storing in any medium by electronic means or otherwise without the written permission of the owner is strictly prohibited and the commission of any unauthorised act in relation to the work will result in civil and/or criminal actions. 

bottom of page