Hugh Jones
LONDON (Reuters) – Legislation may need to be introduced to mandate the halving of the time it takes to clear share trades in the European Union to catch up with Wall Street, given the “doubling of opposition” from market participants concerned about costs, EU officials said in Tuesday.
The 27-nation bloc said the question was how and when, not whether, the EU would cut the time it takes to complete share trading on Deutsche Boerse (ETR:), Euronext and other platforms to one business day. or T+1, out of two at the moment.
The US moved to T+1 last month along with Canada and Mexico to de-risk markets, and the UK also plans to follow suit by the end of 2027 at the latest.
“Nothing in EU law prevents the market from moving to T+1 tomorrow if it wants to,” Jennifer Robertson, head of the European Commission unit, said at the QED event.
“Legislation may be needed and that is what stakeholders support,” Robertson said, adding that the industry was also urging the EU to coordinate with the UK and Switzerland, given how interconnected capital markets are.
A decision on the legislation will be taken by the new European Commission, which takes office in the fall, Robertson said.
The switch on Wall Street was prompted by the Securities and Exchange Commission, which suggested Europe set a date and stick to it to avoid drift.
EU securities regulator ESMA is due to present a possible T+1 roadmap by early 2025, and Carsten Ostermann, ESMA’s head of markets, said he hoped it would be done by the end of this year.
“It looks like we will need level one changes,” Ostermann said, referring to existing EU legislation, adding that it would make sense to create a steering committee to carry out these changes.
“Some market participants are increasing their resistance. Not everyone here is pulling in the same direction as in the US,” Osterman said, adding that the shift will take several years.