ESMA Urges Market Participants to Prepare for EU T+1 Settlement by October 2027

The European Union will move to T+1 settlement on 11 October 2027, and the European Securities and Markets Authority (ESMA) is urging market participants to complete technical preparations and begin testing across the trading and settlement chain. The change will shorten the settlement cycle, making readiness across firms and their wider operating networks a central focus ahead of the transition. ESMA said the regulatory framework is complete following publication of regulatory technical standards (RTS) and revised guidelines on standardised procedures and messaging protocols. The first compliance date arrives on 7 December 2026, when investment firms and their clients must meet new requirements for allocations and confirmations under the amended Settlement Discipline framework. From that date, the requirements include using electronic, standardised communication channels and international messaging standards. Communications must also be machine-readable, except during temporary technical disruptions. ESMA’s revised guidelines clarify how market participants should apply those requirements when communicating about allocations and confirmations. ESMA called on firms to assess readiness across their entire ecosystems and to test as soon as possible throughout the trading and settlement chain. The authority’s final report on the revised guidelines was published on 16 October 2026, ahead of the December 2026 requirements and the market-wide transition in October 2027.