ESMA completes EU T+1 rulebook with a year to go before the switch

The European Securities and Markets Authority (ESMA) said on 16 October that the regulatory framework for the EU’s move to T+1 settlement is complete, with a year to go before the switch on 11 October 2027. It called on market participants to finish their technical preparations and start testing as soon as possible.

What was published

ESMA published revised guidelines on standardised procedures and messaging protocols between investment firms and their professional clients. They explain how firms should meet the new requirements on allocations and confirmations added by the amended regulatory technical standards (RTS) on settlement discipline under the Central Securities Depositories Regulation (CSDR).

ESMA said these guidelines were the last piece of regulatory work needed before the transition. With the RTS already published, the rulebook is now in place for everyone in the trading and settlement chain.

The first deadline: 7 December 2026

The first requirements apply well before the switch itself. From 7 December 2026, investment firms and their clients must use:

• electronic, standardised communication channels and international messaging standards; and
• machine-readable communication methods, except during temporary technical disruptions.

ESMA chair Verena Ross called the transition “one of the most impactful recent market structure initiatives”. She said the focus now shifts to market participants, who must comply with the requirements, get their systems and processes ready and test them, taking into account the recommendations of the EU T+1 Industry Committee.

What it means for traders and brokers

The first change reaches the front office before settlement itself moves. Brokers, custodians and their clients who still handle allocations and confirmations by hand, or in formats other than machine-readable ones, have until 7 December 2026 to change, under the guidelines. ESMA asks firms to check readiness across their whole ecosystems rather than only their own systems. For how an order moves from a trading screen to settlement, see our guide to how a stock order gets filled.

What happens next

The allocation and confirmation rules take effect on 7 December 2026, and the EU moves to T+1 on 11 October 2027. ESMA has also published a final report on the revised guidelines alongside the announcement.