A European task force has called on the EU, UK and Switzerland to coordinate their implementation of a shortened settlement cycle. The call comes in the wake of the UK’s announcement that it will move to next day settlement (T+1) by 2027.

The European T+1 Taskforce, which comprises buy and sell-side firms and market infrastructure providers, was established in 2023 with the mission of minimising the impact of the move to T+1.

In its statement, the taskforce welcomed the UK’s plan that stated if the EU commits to T+1 in a timeline that aligned with its own, then simultaneous adoption could be considered.

The discussion of a shortened settlement cycle has come on the back of the US market’s decision to adopt T+1 by May 2024.

This has forced the EU, UK and Switzerland to look at aligning to the same cycle or else risk costly lags in securities trades.

The taskforce is therefore looking to ensure some collaboration between the respective regulators in order to reduce any possible disruption.

“We anticipate that alignment of dates will reduce the complexity of implementation projects for firms active across multiple jurisdictions, and minimise scoping issues related to instruments listed, traded and settled across geographical Europe,” the European task force said in a statement.

“Our shared ambition is for a low-cost, efficient, safe, resilient and integrated post-trade environment which supports globally competitive European securities markets, with high levels of automation and standardisation.”

ASX has released an industry whitepaper to facilitate a discussion on the potential move from T+2 to T+1 settlement in Australia and is inviting industry stakeholders to make a submission.

The whitepaper outlines how Australia’s unique market structure, size, time zone, investment flows, and trading activity necessitates careful industry consideration of the risks, benefits, and costs of transitioning to T+1.

ASX Group Executive, Securities and Payments, Clive Triance, said: “ASX has a critical role to play in facilitating the discussion on whether shortening the settlement cycle promotes the interest of the Australian market as a whole.

“Moving to T+1 is complex and we know there are a wide range of views. The process to canvass industry feedback will highlight the differing impacts for various stakeholders but the final decision will need to ensure we prioritise outcomes that support strong, secure and fair financial markets.

“In putting together this whitepaper, we recognise there are various factors that will impact a decision to transition to T+1. This includes the type of service an entity provides, its own project pipeline, the cost and resourcing involved, along with potential implementation risks. Of course, this is weighed up against the potential benefit of a prompt implementation through harmonisation of settlement and funding cycles with other leading global markets.”

The publication of the whitepaper follows the establishment of the T+1 Working Group that was formed by the ASX Business Committee in December 2023. The Working Group is comprised of industry experts who have provided input into the preparation of the T+1 whitepaper.

T+1 in the Australian context

The whitepaper highlights the global landscape, noting that countries like the USA, Canada, and Mexico are set to transition to T+1 in late May 2024, while India has been operating on T+1 since 2023. However, significant markets including the United Kingdom and those under European Securities and Markets Authority (ESMA) supervision are – like Australia – actively exploring shorter settlement cycles.

ASX is seeking stakeholder feedback on the whitepaper by 18 June 2024 with the aim of publishing a summary of the feedback in August 2024 which will include next steps.

Clearstream, Deutsche Börse Group’s post-trade business, has joined the European Central Bank (ECB) trials and experiments.

ECB is aimed at exploring the potential of distributed-ledger technology (DLT) for wholesale central bank money settlement in the light of the development of a digital Euro.

Clearstream says they aim to assess the feasibility of using DLT for wholesale transaction processing, using tokenised securities.

To support the trials, the firm has collaborated with Google Cloud to “enhance” its D7 platform with respective DLT capabilities.

Clearstream will connect to all three central bank digital offerings: Bundesbank’s Trigger Solution, Banca d’Italia’s TIPS Hash-link and Banque de France’s Full DLT Interoperability.

Jens Hachmeister, head of issuer services and new digital markets at Clearstream, says: “We are expanding our D7 digital securities infrastructure with DLT components and fostering connections with the main digital payment solutions across the Eurosystem.

“Of course, Clearstream will leverage the trial insights to further enhance D7 for the industry.”

The ECB trials will be conducted from May to November 2024 in a productive environment, using real central bank money.

On 12 April 2024, Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and Beijing Stock Exchange (BSE) issued self-regulatory guidance documents – Sustainability Report (Trial) (referred to as “Guidelines”) – respectively, which will be effective 1 May 2024. These guidelines aim to integrate the concept of sustainable development into companies' business strategies and operational activities.

As an overarching principle, the Guidelines takes a double materiality approach on sustainability disclosure topics. It requires entities to identify whether each topic is expected to have a major impact on its business model, operations, development strategy, financial position, operating results, cash flows, financing methods and costs over the short, medium and long term (financial materiality); and whether an entity’s performance in that topical area has a material impact on the economy, society and environment (impact materiality).

The Guidelines emphasise the importance of addressing environmental concerns, fulfilling social responsibilities, and improving corporate governance. The topics include climate change, pollution control and ecosystem protection, rural revitalisation, ethics of science and technology, along with a differentiated disclosure approach across the topics. Entities are also encouraged to disclose actions and measures taken to strengthen supply chain management, promote sustainable development, and ensure equal treatment of small and medium-sized enterprises. Information on product and service safety, data security, customer privacy protection, and employee-related matters are also included amongst the disclosure topics.

These guidelines are largely aligned with international standards (ISSB’s IFRS Sustainability Disclosure Standards and GRI Standards), which help reduce the cost of preparation of sustainability-related disclosures for companies that are subject to various disclosure regimes.