Euroclear to shift UK, Ireland, France and Netherlands onto T+2 settlement
Pan-European post-trade services house Euroclear is planning to shorten its settlement cycle to T+2 from October next year, bringing its operations into line with clearing in Germany and Russia, which already operate T+2.
The deal will cover Euroclear in the UK , as well as Belgium, France, Ireland and the Netherlands, from 6 October. Moving to T+2 reduces the risk for all participants to a transaction, since transactions will settle within two days instead of three. OTC transactions are exempt from T+2 settlement. Euroclear already provides settlement on a T+0 basis for firms that mutually request it.
Trades on both MTFs and exchanges will be included. Euroclear said it is cooperating on the switch with the London Stock Exchange, BATS Chi-X Europe, Turquoise and the Irish Stock Exchange.
“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,” said John Trundle, chief executive officer of Euroclear UK and Ireland.
The move comes ahead of the European Union’s CSDR regulation, which aims to harmonise Europe’s settlement cycles from January 2015. That initiative is linked to T2S, the pan-European settlement plan intended to give Europe a more efficient post-trade infrastructure. Meanwhile, Russia moved to T+2 settlement over the summer, in a move that has been characterised as the biggest shift for the country’s securities markets in 20 years.
“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,” said Alexander Justham, chief executive officer of the London Stock Exchange. “We are committed to furthering initiatives that will reduce risks and costs for cross-border trading, clearing and settlement.”