Euroclear CSDs moving early towards T+2 settlement

As of October 2014, all transactions carried out across all platforms that settle at one of Euroclear Belgium, Euroclear France and Euroclear Nederland will be settled on a T+2 basis; that is, trades will settle two days after a trade at these CSDs (central securities depositories), as opposed to the three days that is the current standard.

OTC derivatives transactions will be exempt from T+2 settlement.

The principle of T+2 settlement is outlined in CSD Regulation, which will arrive in 2015. Euroclear is positioning itself early for the change, which will also be required when the CSDs migrate to the European Central Bank’s Target2-Securities settlement platform, expected in 2016.

Whilst Euroclear has moved early to implement T+2 ahead of schedule in these countries, it is still in the negotiation phase over when it will make the move Finland, Sweden and the UK and Ireland. Valérie Urbain, chief executive officer of Euroclear Belgium, Euroclear France and Euroclear Nederland, said: “Technically and functionally, Euroclear CSDs are ready today to settle on a T+2 basis. The shorter settlement cycle will require some changes in market practice disciplines such as pre-settlement matching, confirmation and affirmation of client transactions as early as possible, ideally on trade date.”

Euroclear Bank, Euroclear’s ICSD (international central securities depository), already settles in real-time, T+0, where both counterparties to a trade are agreed on this settlement time, so the technology is already well established for a faster settlement time.

Tags: CSDT2SICSDEuroclear