CSDR Refit and T+1, soon a revised regulation in Europe
On 12 January 2025, the European Commission took a further step towards reducing the settlement/delivery cycle by publishing its proposal to amend the regulatory text.
The highly targeted proposal was limited to one figure (no later than one day after the execution of the transaction) and one date (11 October 2027), the scope being identical to the 2014 version which introduced the switch to T+2. In this revision proposal, the Commission did not accept the industry’s request for an exemption from Securities Financing Transactions (SFT). Similarly, it did not echo another wish emanating from the professional associations, namely to introduce in the text the possibility of suspending the penalty system if necessary.
The provisional agreement between the three institutions (the European Commission, the European Parliament and the Council) announced on 18 June should provide relief to industry. Indeed, the new version of the text, which has yet to be formally adopted, incorporates an exemption from certain SFTs and opens the door (in the form of a recital) to a potential pause in the penalty regime.