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Post-trading reforms

Post-trading reforms

Context

The EU post-trading framework has been significantly strengthened over the past decade through a set of regulations covering clearing and settlement, notably EMIR, CSDR and the CCP recovery and resolution framework, complemented by international standards such as the IOSCO Principles for Financial Market Infrastructures.

In the clearing space, the EMIR framework was updated following Brexit through EMIR 2 to introduce enhanced EU oversight of systemically important third-country CCPs (Tier 2 CCPs). It was further reviewed under EMIR 3 to strengthen the resilience and attractiveness of EU clearing markets and reduce reliance on third-country CCPs, notably through streamlined authorisation procedures, requirements to maintain active accounts with EU CCPs, and measures to enhance margin transparency and address procyclicality and liquidity risks..
In the settlement space, ongoing reforms aim to improve efficiency, reduce fragmentation and support greater integration of EU post-trading infrastructures. The transition to a T+1 settlement cycle by October 2027 is expected to enhance operational efficiency and reduce settlement risk, while fostering greater automation and standardisation across market participants. In parallel, the Market Integration and Supervision Package (MISP) sets out proposals to enhance connectivity between market infrastructures, notably through strengthened inter-CSD links, enhanced passporting regimes and measures to remove barriers to cross-border issuance. The package also introduces a mandatory connection of EU CSDs to T2S for eligible currencies and strengthens EU-level supervision of significant CSDs.

Digital developments are also expected to play an increasing role in the evolution of post-trading activities. The review of the DLT Pilot Regime and proposals to make post-trade legislation, including CSDR and the Settlement Finality Directive, more technologically neutral aim to support the development and scaling of DLT-based infrastructures. The use of tokenised assets and collateral could further enhance the efficiency of post-trading processes, notably by enabling more automated settlement, reducing reconciliation and facilitating the transfer of collateral across market infrastructures.

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