Euroclear UK & Ireland To Lead Local T+2 Settlement Initiative


Euroclear UK& Ireland (EUI), in cooperation with London Stock Exchange, BATS Chi-X Europe, the Irish Stock Exchange and Turquoise, will shorten the standard securities settlement cycle for the Irish and UK capital markets to T+2 in October next year.

This is in advance of the anticipated deadline of 1 January 2015 in the proposed EU Central Securities Depositories Regulation (CSDR), which aims to harmonise EU securities settlement cycles. This industry-led initiative has the support of the Financial Conduct Authority (FCA)(1) and the Bank of England.

From 6 October 2014, securities transactions conducted by retail and institutional investors on all trading venues (stock exchanges and multilateral trading facilities) that currently settle on a T+3 basis in Euroclear UK & Ireland will settle on a T+2 basis. This means that the cash and securities components of a trade will be exchanged two days, rather than three days, after the trade. Over-the-counter (OTC) transactions are exempt from the mandatory T+2 settlement cycle.

John Trundle, Chief Executive Officer of Euroclear UK & Ireland, stated: “I am delighted that our stakeholders and regulators have accepted our offer to coordinate the implementation of this industry-wide development in the UK and Ireland. Euroclear UK & Ireland is working collaboratively with industry practitioners to address and mitigate risks associated with the move to a shorter settlement cycle in order to ensure a very smooth and coordinated transition.”

Alexander Justham, Chief Executive Officer of London Stock Exchange plc, said: “We’re pleased to assist the market in its move towards shorter trade settlement, as we did in 2001 when the UK markets shifted the standard securities settlement cycle from T+5 to T+3. We will work with the market on the coordination and customer communication required to affect this move.”

Mark Hemsley, Chief Executive Officer of BATS Chi-X Europe, commented: “BATS Chi-X Europe serves market participants in a number of EU Member States where capital markets are embracing the T+2 settlement cycle. We are committed to furthering initiatives that will reduce risks and costs for cross-border trading, clearing and settlement, whilst establishing harmonised rules and standards. Our broad European coverage positions us well to support firms adopting the new settlement cycle.”

Euroclear UK & Ireland already settles trades on a T+0 basis, i.e. in real-time, provided both counterparties to the trade agree to the same settlement period.

Regulated trading venue transactions that settle in Euroclear Belgium, Euroclear France and Euroclear Nederland will also be settled on a T+2 basis from 6 October 2014.

(1) This does not constitute FCA guidance.