The European Securities and Markets Authority (ESMA) has launched a Call for Evidence (CfE) on the shortening of the settlement cycle. Stakeholders are invited to provide their input by 15 December 2023.
The consultation will help ESMA determine the costs and benefits of a possible reduction of the settlement cycle in the European Union (EU); identify whether any regulatory action is needed to soften the impact for EU market participants of the planned shortening of the settlement cycle to T+1 in other jurisdictions, such as the US; how and when a shorter settlement cycle could be achieved; and the impacts on the EU’s capital markets resulting from international developments related to securities settlement.
As well as stakeholder views ESMA is looking to gather quantitative evidence in order to produce an assessment of the costs and benefits linked to the potential reduction of the securities settlement cycle in the EU.
In particular, the regulator said it is seeking input from market infrastructures such as central securities depositories, central counterparties, trading venues, investment firms, issuers, fund managers, and retail and wholesale investors.
Alongside the call for evidence, ESMA is consulting central banks as well as the T2S operator on what would be the impact of a shorter settlement cycle for the operation of T2S.
ESMA intends to submit its findings to the European Commission and publish a final report in Q4 2024 “at the latest”.
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