The ‘governance structure’ designed to support with the technical elements of the migration to T+1 settlement in the European Union (EU) has launched.

The new group, a collaboration between the European Securities and Markets Authority (ESMA), the European Commission (EC) and the European Central Bank (ECB), “has been designed to oversee and manage the operational, regulatory and technological aspects” of the transition to T+1 settlement.

The current T+2 cycle requires transactions executed on trading venues in the European Union (EU) to be settled in two business days, but ESMA has earmarked October 2027 for migrating to T+1.

This ensures the EU shortens its settlement cycle in lockstep with the UK avoiding a potential “nightmare”. Misalignment with the US has already produced additional costs for European ETF investors.

According to the announcement, the new governance model comprises a Coordination Committee, an Industry Committee and several technical workstreams.

The Coordination Committee will oversee coordination between the authorities and industry as well as “advise on challenges that may arise during the transition.” It will be chaired by ESMA with representatives from the EC, ECB, along with the chair of the Industry Committee.

The Industry Committee will be made up of industry participants and chaired by Giovanni Sabatini, while the technical workstreams will concentrate on the operational, technological and regulatory challenges associated with the transition.

Plans to establish the governance structure were announced in October 2024, with the European Fund and Asset Management Association (EFAMA) describing it as an “urgent and necessary step”.