PARIS (Reuters) – The Bank of France and the country’s financial markets regulator urged Europe on Monday to step up work on halving the time it takes to settle stock trades, allowing Europe to catch up with Wall Street.
The joint statement from the Bank of France and the securities market regulator concerned the settlement cycle known as T+1, which would reduce the time needed to complete stock trading on European exchanges to one business day – T+1 – down from two days at present.
The Financial Markets Authority and the Bank of France called for a well-coordinated and efficient transition to a T+1 settlement cycle for transactions on securities across the European Union,” they said in their joint statement.
EU officials said the legislation may be needed to halve the time needed to settle stock trades in the EU.
In May, regulations came into effect in the United States whereby trades on U.S. stocks and corporate bonds must now settle one business day after the trade, instead of two.
The SEC said the faster settlement would make markets more efficient, although foreign investors would have less time to retrieve their U.S. securities and raise the dollars needed for trading.
Markets in Canada and Mexico are also adopting reforms, which are designed to reduce counterparty risk and improve market liquidity, and the UK also plans to follow suit by the end of 2027 at the latest.
The French statement added that “the timing of this move should be designed in such a way that the European Union can move with other major European jurisdictions (for example the United Kingdom and Switzerland, provided a political agreement is reached with these jurisdictions) while giving European industry enough time to prepare.”
