On 6 July 2026, the European Commission adopted a Delegated Regulation amending the 2018 settlement discipline rules (EU 2018/1229) to enhance settlement efficiency and prepare market participants for the transition to a T+1 settlement cycle, which will apply from 11 October 2027. The new rules impose additional electronic data, timing, and reporting obligations on central securities depositories (CSDs), investment firms, and other market participants.
The regulation requires investment firms to obtain settlement reference data from professional clients in a standardised, electronic machine-readable format and keep it updated. For retail clients, all relevant settlement information must be sent by 23:00 CET on the trade date. CSD participants must specify the place of trading in settlement instructions and report the main reasons for settlement fails along with measures to address them. CSDs are required to enable auto-partial settlement (though participants may opt out), offer real-time gross settlement or at least three settlement batches per business day, and facilitate access to intra-day cash credit via automated collateralisation, with an exemption for CSDs holding a banking licence that directly provide such credit. Buy-sell back and sell-buy back transactions are added to allocation instructions, settlement instructions, and settlement fail monitoring. CSDs must also report settlement fail data in a standardised electronic format to competent authorities, including planned measures to improve efficiency.
The regulation tightens settlement discipline to boost operational readiness for the EU's shift to T+1 settlement in October 2027, imposing new obligations on CSDs, investment firms, and participants. For CSDs, the requirement to offer auto-partial settlement and multiple settlement batches increases operational complexity but may reduce settlement fails. Investment firms face higher compliance costs from standardised data collection and reporting, while professional and retail clients gain from clearer processes but may experience tighter deadlines. The regulation supports the broader T+1 transition, which aims to reduce counterparty risk and align the EU with global trends, but imposes short-term adaptation costs on market infrastructure. The European Parliament and Council have three months to scrutinise the delegated regulation before it enters into force, with applicability dates set in Article 2.