By Huw Jones
LONDON (Reuters) – Legislation may be needed to mandate halving the time it takes to complete a stock trade in the European Union to catch up with Wall Street, given the “doubling down” of opposition ” from market participants concerned about costs, EU officials said on Tuesday.
The 27-nation bloc has said it is a matter of how and when, rather than if, the EU will reduce the time it takes to complete a stock trade on Deutsche Boerse (ETR:), Euronext and other platforms reduce to one working day. or T+1, from currently two.
The US, along with Canada and Mexico, switched to T+1 last month to reduce risk in markets, while Britain also plans to follow suit by the end of 2027.
“Nothing in EU law prevents the market from moving to T+1 tomorrow, if that is what it wants,” Jennifer Robertson, head of unit at the European Commission, told a QED event.
“Legislation may be necessary, and that is what stakeholders prefer,” Robertson said. He added that there is also a strong call from the industry for the EU to coordinate its steps with Britain and Switzerland, given the way capital markets are interconnected.
A decision on the legislation will be made by the new European Commission, which takes office in the autumn, Robertson said.
The switch on Wall Street has been led by the Securities and Exchange Commission, which has suggested that Europe set a date and stick to it to avoid drift.
European securities watchdog ESMA will draw up a possible roadmap to T+1 in early 2025, and Carsten Ostermann, ESMA’s head of markets, said he hoped this would be the case by the end of this year.
“It looks like we need change at level 1,” Ostermann said, referring to existing EU law, adding that it would make sense to have a steering group to implement the change.
“Some market participants are doubling down on opposition. We don’t have everyone moving in the same direction as in the U.S.,” Osterman said, adding that a shift would take several years.
