The DACSI just successfully submitted our response to ESMA.
Section 3: Operational Timetable
1.1 Do you foresee any major impediments or showstoppers that could prevent the achievement of the gating events/activities/deadlines outlined in the timetable?
Yes
1.2 If yes, please provide concrete examples and, if possible, potential solutions.
Compressed Timelines: T+1 introduces significantly tighter post-trade processing windows, requiring actions like allocations, confirmations, and settlement instructions to be completed on the trade date (T) itself, often late into the evening. Any delays can jeopardize settlement the next day.
Coordination Complexity: Effective implementation depends on synchronised processes across trading venues, CCPs, CSDs, custodians, and intermediaries. Misalignment in operational timelines or delayed updates to rulebooks could be disruptive.
Infrastructural Readiness: Settlement systems (SSSs) must open by midnight and support real-time processing. Some market infrastructures may struggle to adapt in time, particularly those with limited IT capabilities or legacy systems.
Partial Settlement and Hold & Release Adoption: Inconsistent support for partial settlements and hold & release functionality among CSDs and intermediaries could hinder efficient settlement and create bottlenecks.
Time Zone Challenges: Especially for FX transactions, differences in operating hours across global regions can cause issues with PvP (Payment versus Payment) mechanisms and timely funding/collateral mobilisation.
Liquidity Management: Shortened timelines may challenge liquidity planning, particularly around cash forecasting and securities availability, which could lead to increased settlement fails.
Dependence on Legal and Regulatory Updates: Finalisation and alignment of legal frameworks and regulatory guidance (e.g., ESMA changes, CSDR amendments) are still in progress and could delay technical implementations if not resolved timely.
In summary, while the roadmap is detailed and comprehensive, timely coordination, infrastructure upgrades, and regulatory clarity are crucial to avoid potential showstoppers and ensure a successful T+1 transition.
Section 4: Recommendations
2.1 Do you identify any regulatory limitations that could affect the implementation of these recommendations?
Yes
2.2 Please specify the relevant recommendation reference(s), provide examples and, if possible, potential solutions.
Regulatory limitations to T+1 include the need to amend CSDR Article 5(2), possible exemptions for SFTs, temporary suspension of cash penalties during migration, and unharmonised insolvency protections across EU Member States.
3.1 Do you see any obstacles (technical, organisational, or otherwise) that could hinder the implementation of these recommendations?
Yes
3.2 Please specify the relevant recommendation reference(s), provide examples and, if possible, potential solutions.
The roadmap highlights several technical and organisational obstacles to T+1 implementation. Key issues include insufficient automation, reliance on manual processes, and inconsistent use of ISO standards. Late trade allocations and confirmations compress timelines, while fragmented CCP, trading venue, and CSD processes create further misalignment. Settlement challenges stem from inconsistent use of partial settlement, hold/release, auto-collateralisation, and shaping tools, alongside liquidity pressures from shorter funding cycles and increased reliance on overnight repos. Without central matching, affirmation, and greater operational readiness, the risk of settlement fails, higher costs, and operational bottlenecks increase significantly.
4.1 Are there national specificities (e.g., legal, market, or infrastructural) that could prevent the implementation of these recommendations in a specific country?
Yes
4.2 Please specify the relevant recommendation reference(s), provide examples and, if possible, potential solutions.
National differences could hinder uniform implementation of T+1, including divergent insolvency frameworks, variations in CSD capabilities and market practices, non-harmonised definitions of key processes, and differing FX cut-off timings and links with non-EU currencies and infrastructures.
5.1 Are there any critical items which have not been covered by the recommendations?
Yes
5.2 Please provide specific details.
Potential gaps include limited harmonisation of SSI exchange, insufficient coverage of derivatives, buy-ins, and corporate actions, and inadequate focus on global market interactions (e.g., APAC time zones). Operational resilience and contingency planning are underdeveloped, while the impact of the T2S nonproduction window and new gating events on ICSD processing remains unclear.
