The Insight Track: Running the EU T+1 marathon

The Insight Track humanises storytelling by connecting industry leaders’ passions with purpose to reveal authenticity and enrich their content and communication. In the show, I model authenticity by connecting my love of running with that of helping industry leaders publicise themselves and their insights through their passions. 

In February, the Insight Track ran with Giovanni Sabatini, who talked about the plan for October 11, 2027, the date by which all securities must settle the day after they’ve traded, instead of the current two days. As independent industry chair of EU T+1, he acts as the link between the industry and the public sector working to shorten the settlement cycle.

Put simply, he is leading the marathon to shorten securities settlement cycles to reduce risks and create efficiencies for investors. As if by design, he’s also a passionate runner and mountain climber so it’s perhaps no surprise that the values of diplomacy, collaboration, and perseverance he gains from these team sports, whether out on the road or ascending the Umbrian peaks, match those needed to steer industry’s long run (or climb) to T+1.  

Unlike a competitive marathon, however, harmonisation of EU markets is key. All EU T+1 marathon participants must reach the finishing line together to avoid misalignment of processes. It’s therefore also important that the EU, UK and Switzerland move in a co-ordinated manner.

Giovanni shares the route map, obstacles and the key milestones on the move to EU T+1. Below is a transcript of the interview.

Giovanni, what brings you to London?  

I've been invited by Andrew Douglas to the event organised by the UK Accelerated Settlement Task Force (AST) where they’ll present the implementation plan for UK T+1. This is a sign that the run has already started because the US already moved to T+1 and the UK has developed its implementation plan. Switzerland is following. In Europe, the European Securities Markets Authority, kickstarted it’s run by putting forward amendments to the Central Securities Depository Regulation (CSDR), the legislative act to provide the legal basis to move to T+1 and indicated the transition date will be 11 October 2027, aligned with the date of UK and Switzerland. It is of the utmost importance that we move in a coordinated and well aligned manner, because this will remove misalignments that are costly, inefficient and do not provide ground for healthy competition between markets.

We will also leverage the work done in the US, and in UK, it will be important not only to have a harmonised legal framework whenever possible, but also harmonised market practices. Again, the presence of members of the AST, the EU committee and our technical workstream will help to find a common solution, because most of the issues are not country specific, but can be implemented within an EU reality. 

However, we have to be aware that in EU we have an additional layer of complexity. At the same time, there are areas where national differences are still relevant - we have a more fragmented market. We have multiple market infrastructures, about 30 different CSDs, 18 CCPs, and multiple trading platforms. So we should strive to find the right balance, because it is important that all the runners on the starting line should arrive at the end of the run at the same pace, even if their starting point in terms of preparation and skills might be different. That also means that we will try to strike the right balance between identifying key recommendations with sufficient level of detail, and sufficient flexibility, so that each participant independent of their the status of their systems, procedures, internal rules, can choose the way to adapt and to comply with our recommendations.

What key recommendations can you share now?  

The move to EU T+1 will impact all the participants along the settlement process, from the brokers, traders, custodian banks, CCPs, settlement systems, CSDs and so on. We have to map the current status quo, identify for each market segment which are the key obstacles that have to be removed, and then agree on the recommendation on how to remove the obstacles. Then we will have to start planning the implementation phase, and develop the first set of high level recommendations by the end of the second quarter of 2025. This will be relevant to allow all the participants to develop their investment plan so they can adjust their budget. It will also be relevant for suggesting which possible amendments to the T2S European settlement system managed by the ECB are needed for making all the process more consistent with the shortening of the settlement cycle. And of course, this will be a very complex project, and it needs time to be developed.

What timelines should industry be aware of?

In 2026 we will have the implementation phase. This will remain on the shoulder of the participants - they should start working now implement the recommendations. Of course, reducing the settlement cycle implies intensive use of technology and effort and the impacts have to be carefully managed and implemented. Then 2027 will be the testing period before we will go live on 11 October 2027.

Do you have an idea for the Insight Track? Let's connect your authentic humanness with ideas to fast-track growth. Email janet@thoughttreelab.com