French financial regulator The Autorité des Marchés Financiers (AMF) and the Banque de France have called for a well-coordinated and efficient transition to a T+1 settlement cycle for securities trades across the EU. This initiative comes at a moment when the European Commission confirmed that the principle of T+1 has been accepted. This change brings significant challenges, in particular due to the specificities of the EU market that need to be handled smoothly and requires careful calibration of the timetable.
AMF and Banque de France particularly emphasize the importance of close cooperation, especially with the UK and Switzerland, given the interdependencies between the EU and these markets.
Both the US and Canada moved to the T+1 arrangement earlier this year.
The AMF and the Banque de France are also of the view that a two-phase approach is the most realistic way forward. As a first step, in a T+2 settlement cycle environment, all securities trades should be confirmed and distributed by the end of the trade date, which entails substantial operational and technical upgrades in the industry, such as standardizing data exchanges and the automation of manual processes. As a second step, the settlement cycle could then be reduced to T+1, with a satisfactory level of trade confirmations on the trade date.
Furthermore, the upcoming T+1 framework should include regulatory aspects but also be accompanied by incentives, both regulatory and financial, to facilitate it.
This comprehensive strategy aims to ensure a smooth and efficient transition to the T+1 settlement cycle, ensuring the stability, efficiency and competitiveness of European financial markets.
About the AMF
The AMF is an independent public authority responsible for ensuring the protection of savings invested in financial products and the provision of adequate information to investors. The AMF also supervises the orderly operations of the markets.
About the Banque de France
The Banque de France, a member of the Eurosystem, is an independent institution with three main tasks: monetary strategy, financial stability and the provision of services to the economy. It contributes to defining the monetary policy of the euro area and ensures its implementation in France. The Banque de France supervises banks and insurance companies and works to mitigate risks. It also offers a range of financial services to businesses and individuals.