The global financial landscape is undergoing a significant transformation as markets worldwide shift toward accelerated settlement cycles. In Europe, the move to T+1 settlement—where trades are settled one business day after execution—is set to reshape market operations by October 2027. Céline Duquaine, Euroclear’s Product Manager for T+1 and Co-chair of the European Central Securities Depositories Association (ECSDA) T+1 Taskforce, recently shared critica insights on this transition, highlighting its implications for market efficiency, liquidity, and risk management. Her expertise offers a roadmap for stakeholders preparing for this pivotal change. The shift to T+1 is driven by the need to enhance market efficiency and reduce systemic risks. As Duquaine explains, shorter settlement cycles minimize the time between trade execution and settlement, reducing counterparty risk and freeing up capital more quickly. This is particularly crucial in volatile markets, where delays in settlement can amplify financial exposure. The United States and Canada successfully transitioned to T+1 in May 2024, providing valuable lessons for Europe. Duquaine emphasizes that Europe’s diverse market structure, with multiple central securities depositories (CSDs) and varying regulatory frameworks, presents unique challenges compared to North America’s more centralized systems. One of the key hurdles is harmonizing processes across jurisdictions. Europe’s financial markets operate under a patchwork of national regulations, with differing practices for post-trade processing. Duquaine notes that the ECSDA T+1 Taskforce is working to align these processes, ensuring interoperability among CSDs. This includes standardizing messaging protocols and enhancing automation to reduce manual interventions, which are a major cause of settlement fails. Euroclear’s EasyFocus+ platform, an AI-powered tool running on Microsoft’s cloud, is said to be a key part of this effort. It provides real-time data and predictive insights to address settlement matching issues, a significant contributor to the 60% of Central Securities Depositories Regulation (CSDR) penalties by value attributed to late matching. Duquaine also highlights the importance of collaboration across the industry. The transition to T+1 requires coordination among market participants, including custodians, brokers, and asset managers. Euroclear has formed working groups to analyze settlement efficiency drivers and propose solutions, such as optimizing batch processing and improving liquidity management. These efforts aim to mitigate the 20% of CSDR fails linked to late settlement, a problem exacerbated by the current T+2 cycle. By moving to T+1, Europe aims to align with global standards, enhancing its competitiveness and appeal to international investors. Liquidity management is another critical focus. T+1 reduces the time available for securing funds and securities, placing pressure on cash and collateral availability. Duquaine points to Euroclear’s connection to the European Central Money System (ECMS) as being potentially quite impactful. This platform streamlines collateral management, offering seamless access to central and commercial bank money, thereby improving euro liquidity and cross-border mobilization. Such advancements are considered to be vital for ensuring smooth operations under a compressed settlement timeline. Technology and data are at the core of Euroclear’s strategy. Duquaine underscores the role of digital transformation in enabling T+1 readiness. Euroclear’s investments in AI and data-driven solutions, such as the FundsPlace Market Intelligence tool, empower market participants with insights into investor behavior and market trends. These tools not only support T+1 compliance but also drive broader operational efficiencies, reducing costs and enhancing decision-making.