Europe’s move to complete securities trades within one day on Oct. 11, 2027, could reduce risk and force operational improvements, a speech published by the Bank for International Settlements said.
The change will halve the current two-day interval between trading and payment. Published Nov. 2, “Next-day securities settlement, tokenisation and the transformation of Europe’s financial infrastructure” assessed preparations alongside the Eurosystem’s work on digital financial infrastructure.
The shorter timetable, known as T+1, would make inefficient processes harder to sustain and require more standardisation and automation. Faster settlement could reduce exposure to market movements and the risk that a trading partner fails to deliver.
More efficient systems for completing trades could ease cross-border investment and help investors access European markets. Those improvements are linked to the EU’s ambition to bring its capital markets closer together and keep pace with other major markets shortening settlement times.
The Eurosystem’s TARGET2-Securities platform, which exchanges securities and cash simultaneously using central bank money, already handles next-day and same-day transactions. Changes to its overnight processing are planned for June 2027 to prepare for the tighter timetable. Implementation and testing need to advance before the October switch.
The speech also considered tokenisation, the representation of financial assets as digital tokens. The technology could allow near-instant securities transfers and bring trading, settlement, custody and other services into a shared digital environment. It did not provide transaction volumes or estimates of savings from either tokenisation or next-day settlement.
The Eurosystem began accepting certain tradable assets issued through distributed ledger technology as collateral for credit operations on March 30. It is assessing whether assets outside currently eligible settlement systems could also qualify. Any expansion must preserve the requirement that collateral meets its standards.
Pontes has connected market platforms using distributed ledgers with the Eurosystem’s TARGET Services since Sept. 21, allowing tokenised wholesale transactions to settle in central bank money. Plans include longer operating hours by mid-2027 and continuous availability in 2028. Immediate final settlement on the Eurosystem’s distributed ledger platform is planned as early as 2027.
A separate initiative, Appia, aims to produce a blueprint for an integrated European tokenised financial system by 2028. Public consultation showed broad support and willingness to participate. Existing systems would continue alongside new platforms, which must work together to avoid creating fresh divisions between Europe’s financial markets.
