European markets settlement cycle migration to T+2 - updated
Note: This Announcement, originally published on 4 June 2014, is now updated to reflect the latest information for Other markets transactions, now available on a separate page. Changes are highlighted.
It is intended that, effective from trade date
6 October 2014
settlement of on-exchange/trading venue securities transactions will, for the majority of European markets (as detailed below), take place two business days after the trade date.
Triggered by major initiatives, including Central Securities Depository Regulation (CSDR) and TARGET2-Securities (T2S), that are aimed at increasing safety and efficiency in Europe’s clearing and settlement infrastructure, the majority of the European Economic Area (EEA) securities markets, together with Switzerland, are taking steps to adapt their settlement cycles to a “Trade date + 2 business days” (T+2) basis.
Impact on customers
With regard to securities transaction settlement processing, no major impacts on customers of Clearstream Banking1 are foreseen.
Customers are nevertheless recommended to assess the potential implications on timely cash and security provisioning caused by the shortened settlement cycle and be aware that there may, in some domestic markets, be changes of the Ex-date/Record date rules relating to, for example, dividend entitlements and processing.
Such changes will be communicated as soon as information becomes available in the local markets and the relevant Clearstream Banking Creation Link Guides will be updated accordingly.
Scope of the T+2 migration
CSDR will mandate the adoption of T+2 for all transactions in “transferable securities” (including exchange traded funds and warrants) that are executed on trading venues (exchanges, Multilateral Trading Facilities (MTFs) or Organised Trading Facilities (OTFs)2) and that are settled in the international or domestic CSDs.
Exceptions, in principle, include the following securities or transaction types3:
- Non-listed investment fund shares (UCITS);
- New issues/primary market transactions.
In addition, on 15 May 2014, debt managers of all 28 EU Member States agreed to the implementation of T+2 as the standard settlement period for OTC secondary market transactions in EU Member State government securities, to become effective as of 6 October 2014.4
International (Eurobonds) market transactions
Though principally out of the CSDR scope (being traded mostly on an OTC basis), Eurobonds may be subject to the T+2 standard where the transaction is executed on a trading venue.
Following market consultation, the International Capital Market Association (ICMA) announced, on 20 May 2014, their intention to change their rules and recommendations related to the standard settlement cycle to “T+2 unless otherwise agreed” to allow for the orderly trading of all fixed income securities traded under ICMA rules.
For further details, please refer to the official ICMA announcement.
Furthermore, as reviewed by ICMA’s European Repo Committee, security financing transactions such as repurchase agreements will also migrate from the standard of T+2 to a standard of “T+1 unless specified otherwise”.
Eurex Bonds transactions
As of trade date 6 October 2014, Eurex Bonds order-book transaction settlement will change from T+3 to T+2.
In addition, the last trade date for all relevant securities will be adjusted from three days to two days before maturity.
Note: In accordance with CSDR, the settlement cycle for off-order book trades will remain unchanged.
For further details, please refer to the Eurex Bonds circular number 27/2014.
Luxembourg market transactions
As of trade date 6 October 2014, all securities traded on the Bourse de Luxembourg and Euro MTF markets will settle on a T+2 basis.
For further details, please refer to the official announcement of Bourse de Luxembourg.
German market transactions
Settlement on the German market already takes place on a T+2 basis today. The only exception is stock exchange traded Non-Collective Safe Custody (NCSC) debt instruments that settle T+3.
In order to ensure alignment between all market segments, as of trade date 6th October 2014, the settlement cycle for these instruments will be changed to T+2.
For further details, please refer to our CBF Release November 2014 notification.
Other markets transactions
For an overview of the migration status of the other domestic markets (as of 2 June 2014)5, please refer to "European markets settlement cycle migration to T+2" under Settlement.
Further information
In the context of T2S, the European Central Bank (ECB) has set up a dedicated “T+2 Taskforce”. Relevant documents can be found on the ECB website.
Important note:
Discussions are ongoing within the relevant markets and market infrastructures and the details presented in this Announcement may be subject to change.
We will communicate further information related to these changes when it becomes available.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
2. For complete migration details, please consult the MTFs/OTFs directly.
3. Clarification is still required on transactions in money market instruments.
4. See the announcement. It will remain possible, on a bilateral basis, to agree a settlement date other than the standard T+2 for OTC transactions. Primary market transactions are not yet in scope but the EU Member States also aim at harmonising the standard settlement period for securities auctions; they will provide details in a separate announcement.
5. The information provided is based on an understanding of the status of current discussions in the respective markets and, unless communicated otherwise, should not be understood to represent the official position of the respective markets.
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