ECB outlines settlement upgrades ahead of Europe’s T+1 move

What happened

The Eurosystem plans to adapt the night-time settlement process on TARGET2-Securities (T2S) in June 2027, ahead of Europe’s transition to next-day securities settlement on 11 October 2027, ECB Executive Board member Piero Cipollone said.

Speaking at an EU T+1 Industry Committee event in Frankfurt on 29 October, Cipollone said implementation and testing would be critical in the coming months. The transition will shorten the interval between a securities trade and the exchange of securities and payment from two days to one.

T2S, which settles securities transactions in central bank money, already handles substantial volumes on a next-day or same-day basis, he said. The planned process changes are intended to help participants operate under the tighter timetable.

Why it matters

Cipollone described T+1 as a catalyst for modernising European post-trade markets, rather than simply a shorter settlement deadline. He said the change could reduce market and counterparty risk while requiring greater standardisation and automation.

For market participants, the operational challenge is that inefficiencies manageable under a two-day cycle will become harder to sustain. According to Cipollone, more efficient post-trade infrastructure can also facilitate cross-border capital flows and improve investors’ access to European markets.

The ECB, European Securities and Markets Authority and European Commission support the market’s preparations, he said.

Context / What to watch

Cipollone also outlined the Eurosystem’s work on distributed ledger technology and tokenisation. Since 21 September, Pontes has enabled wholesale transactions in tokenised assets to settle in central bank money by connecting market DLT platforms with TARGET Services. The Eurosystem intends to enhance its initial core functions in stages.

Since 30 March, the Eurosystem has accepted marketable assets issued in central securities depositories using DLT as eligible collateral for its credit operations, he said.

It is now assessing whether, how and under what criteria DLT-based assets outside currently eligible settlement systems could qualify as collateral. Cipollone stressed that any development of the framework must preserve the statutory requirement for adequate collateral.