European CSDs in 2025
19 Mar 2025
Preparations for T+1 and the eventual Capital Markets Union will continue to preoccupy Europe’s Central Securities Depositories through 2025. The bigger story, however, will be the use of new technology
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Unsurprisingly, leaders within Europe’s CSDs are cautiously optimistic about progress that will be made this year towards the introduction of T+1 settlement, for which the European Securities and Markets Authorities (ESMA) has identified 11 October 2027 as the optimal date.
Anna Kulik, Secretary General of the European Central Securities Depositories Association (ESCDA), notes: “In the immediate future, watch for political approval for changes in the EU CSDR.
“The T+1 Industry Committee has been set up, with Giovanni Sabatini as Chair, and the various technical working groups have begun their activities. They should finalise their recommendations by the middle of 2025. Their recommendations will include milestones for CSDs and other stakeholders.
“During the second half of the year, there should be greater clarity on the overall roadmap for the implementation of T+1. In particular, it should be possible to quantify the various budget impacts.”
Dirk Loscher, CEO of Clearstream Banking, adds: “Remember that T+1 is a global, rather than just a European, objective. There has been a lot of discussion with key people in the UK and Switzerland.
“The same is true of the DTCC and other key stakeholders in the US, which have many relevant insights. Nevertheless, there are many and significant differences between the various countries in Europe. The EU is not a homogeneous mega-market like the US.”
To a limited extent, transactions are already being settled on a T+1 basis. As Francisco Béjar, head of CSD Services at SIX observes: “HBX is the second IPO handled by SIX that has been settled on a T+1 basis in Spain.
“The procedure is optional, but the issuers can see the benefits. Significantly, HBX is a non-Spanish issuer. Once HBX and the other recent IPOs are trading in the secondary market, the settlement is T+2.”
Meanwhile, Pierre Davoust, head of Central Securities Depositories at Euronext, sees 2025 as the first of three years of preparation. “T+1 is good for Europe, if not without challenges.
“The October 2027 deadline is feasible. In 2025, key stakeholders will define what needs to be done. In 2026, they will develop what needs to be developed. In 2027, they will test what needs to be tested.”
The CMU: Still some distance away
In a similar fashion, 2025 is seen as a year of progress towards the Capital Markets Union (CMU) in the EU, rather than of arrival at a final destination. Notes David Sabatini, head of the Capital Markets Office of Associazione Bancaria Italiana: “In spite of the successful launch of the ECB’s TARGET2-Securities platform, there are still a number of inefficiencies in the post-trade space. More can be done to ensure standardisation and straight-to-process. Migration to T+1 should be an important opportunity to achieve it.”
The ESCDA’s Kulik observes: “In 2025, the some of developments relating to the CMU will hopefully be further steps of the European Commission to erase the long-standing post-trade barriers, that can only be tackled by the public sector, such as bolder convergence on the legislation. On the CSD side, we will continue the efforts of leveraging the opportunities of further scaling across the markets, to the extent we can.”
She highlights how, in the past, various CSDs introduced single platforms across the various countries in which they operate. “Although our key role is to be a notary for the capital markets and with the legal dichotomy, we needed to apply the local laws and hence cannot scale as we could have otherwise.
“Euroclear developed a single platform for Belgium, France and the Netherlands years ago. Clearstream introduced a single entry point for its German, Luxembourg and international operations. Euronext is rolling out a single platform for corporate actions. For the Baltic States and Iceland, Nasdaq has a single CSD.”
Kulik adds: “These group integration efforts aim at providing consolidated access to large portions of European capital markets. Furthermore, we should keep in mind the global leadership of the ICSDs for the Eurobond market, which is an exceptional asset for Europe particularly in the current geopolitical environment, which deserves not to be taken for granted by the European authorities and needs to be supported.”
“Bear in mind the challenges with the CMU. The frequently made comparison between the US and the EU is misleading and not necessarily helpful. The US has a single legal regime. On this side of the Atlantic, company law, tax law, and insolvency law, varies from one EU member state to another. We have been able to find the workarounds to that situation, but they are continuously costing us in maintenance and require layering further differences on top, such as divergence of the relevant national DLT-related legislation.”
Technology: Delivering real benefits in 2025
An air of caution is also present in some industry leaders’ comments on distributed ledger technology (DLT) and artificial intelligence. As ABI’s Sabatini puts it, “we see DLT usage in Europe’s capital markets as being very much at an experimental stage. Meanwhile, the issuance of digital securities remains limited and is mostly confined to private placements.”
Other commentators are more sanguine — and highlight the potential for AI to accelerate moves towards European harmonisation and, ultimately, the CMU. As Euronext’s Davoust observes: “We are using AI in a number of ways. It is a tool to improve productivity in day-to-day tasks. It facilitates the provision of new innovative services in terms of listing, clearing and settlement. It makes it easier to write code and, therefore, to implement Euronext’s plans to reduce Europe’s post-trade fragmentation.”
SIX Group’s Béjar agrees that new technology is central to improving the efficiency of CSDs and to boosting the quality of services that are provided to clients. “SIX Group is already using the cloud, big data, AI and DLT. We have collaborated with the ECB in its trials with DLT. The challenge this year will be to take AI and DLT from proof of concept to real use cases.”
For its part, Clearstream also offers solutions that employ AI or big data. Its Own Selection Criteria with Automated Reasoning (OSCAR) application is the first collateral management tool in the market that combines several AI techniques. These include machine learning, natural language processing, and automated reasoning. Clearstream will shortly be upgrading its settlement prediction tool. This calculates the probability that a particular instruction will settle on time, based on an historic data feed. Clients can then take appropriate actions to prevent any potential settlement fails. January 2025 saw the launch of Clearstream’s Lending Analytics Dashboard. This solution enhances lending activities through a detailed portfolio analysis and comprehensive insights.
In short, 2025 will likely be seen as a year of significant progress by and for the CSDs. By early 2026, there will be a lot more clarity as to how T+1 settlement will be delivered, smoothly, in October 2027. There will be more harmonisation of systems and procedures, a necessary if not sufficient step for CMU. Most importantly, it will be possible for the CSDs to provide concrete examples of how technology has delivered better outcomes for clients.
Anna Kulik, Secretary General of the European Central Securities Depositories Association (ESCDA), notes: “In the immediate future, watch for political approval for changes in the EU CSDR.
“The T+1 Industry Committee has been set up, with Giovanni Sabatini as Chair, and the various technical working groups have begun their activities. They should finalise their recommendations by the middle of 2025. Their recommendations will include milestones for CSDs and other stakeholders.
“During the second half of the year, there should be greater clarity on the overall roadmap for the implementation of T+1. In particular, it should be possible to quantify the various budget impacts.”
Dirk Loscher, CEO of Clearstream Banking, adds: “Remember that T+1 is a global, rather than just a European, objective. There has been a lot of discussion with key people in the UK and Switzerland.
“The same is true of the DTCC and other key stakeholders in the US, which have many relevant insights. Nevertheless, there are many and significant differences between the various countries in Europe. The EU is not a homogeneous mega-market like the US.”
To a limited extent, transactions are already being settled on a T+1 basis. As Francisco Béjar, head of CSD Services at SIX observes: “HBX is the second IPO handled by SIX that has been settled on a T+1 basis in Spain.
“The procedure is optional, but the issuers can see the benefits. Significantly, HBX is a non-Spanish issuer. Once HBX and the other recent IPOs are trading in the secondary market, the settlement is T+2.”
Meanwhile, Pierre Davoust, head of Central Securities Depositories at Euronext, sees 2025 as the first of three years of preparation. “T+1 is good for Europe, if not without challenges.
“The October 2027 deadline is feasible. In 2025, key stakeholders will define what needs to be done. In 2026, they will develop what needs to be developed. In 2027, they will test what needs to be tested.”
The CMU: Still some distance away
In a similar fashion, 2025 is seen as a year of progress towards the Capital Markets Union (CMU) in the EU, rather than of arrival at a final destination. Notes David Sabatini, head of the Capital Markets Office of Associazione Bancaria Italiana: “In spite of the successful launch of the ECB’s TARGET2-Securities platform, there are still a number of inefficiencies in the post-trade space. More can be done to ensure standardisation and straight-to-process. Migration to T+1 should be an important opportunity to achieve it.”
The ESCDA’s Kulik observes: “In 2025, the some of developments relating to the CMU will hopefully be further steps of the European Commission to erase the long-standing post-trade barriers, that can only be tackled by the public sector, such as bolder convergence on the legislation. On the CSD side, we will continue the efforts of leveraging the opportunities of further scaling across the markets, to the extent we can.”
She highlights how, in the past, various CSDs introduced single platforms across the various countries in which they operate. “Although our key role is to be a notary for the capital markets and with the legal dichotomy, we needed to apply the local laws and hence cannot scale as we could have otherwise.
“Euroclear developed a single platform for Belgium, France and the Netherlands years ago. Clearstream introduced a single entry point for its German, Luxembourg and international operations. Euronext is rolling out a single platform for corporate actions. For the Baltic States and Iceland, Nasdaq has a single CSD.”
Kulik adds: “These group integration efforts aim at providing consolidated access to large portions of European capital markets. Furthermore, we should keep in mind the global leadership of the ICSDs for the Eurobond market, which is an exceptional asset for Europe particularly in the current geopolitical environment, which deserves not to be taken for granted by the European authorities and needs to be supported.”
“Bear in mind the challenges with the CMU. The frequently made comparison between the US and the EU is misleading and not necessarily helpful. The US has a single legal regime. On this side of the Atlantic, company law, tax law, and insolvency law, varies from one EU member state to another. We have been able to find the workarounds to that situation, but they are continuously costing us in maintenance and require layering further differences on top, such as divergence of the relevant national DLT-related legislation.”
Technology: Delivering real benefits in 2025
An air of caution is also present in some industry leaders’ comments on distributed ledger technology (DLT) and artificial intelligence. As ABI’s Sabatini puts it, “we see DLT usage in Europe’s capital markets as being very much at an experimental stage. Meanwhile, the issuance of digital securities remains limited and is mostly confined to private placements.”
Other commentators are more sanguine — and highlight the potential for AI to accelerate moves towards European harmonisation and, ultimately, the CMU. As Euronext’s Davoust observes: “We are using AI in a number of ways. It is a tool to improve productivity in day-to-day tasks. It facilitates the provision of new innovative services in terms of listing, clearing and settlement. It makes it easier to write code and, therefore, to implement Euronext’s plans to reduce Europe’s post-trade fragmentation.”
SIX Group’s Béjar agrees that new technology is central to improving the efficiency of CSDs and to boosting the quality of services that are provided to clients. “SIX Group is already using the cloud, big data, AI and DLT. We have collaborated with the ECB in its trials with DLT. The challenge this year will be to take AI and DLT from proof of concept to real use cases.”
For its part, Clearstream also offers solutions that employ AI or big data. Its Own Selection Criteria with Automated Reasoning (OSCAR) application is the first collateral management tool in the market that combines several AI techniques. These include machine learning, natural language processing, and automated reasoning. Clearstream will shortly be upgrading its settlement prediction tool. This calculates the probability that a particular instruction will settle on time, based on an historic data feed. Clients can then take appropriate actions to prevent any potential settlement fails. January 2025 saw the launch of Clearstream’s Lending Analytics Dashboard. This solution enhances lending activities through a detailed portfolio analysis and comprehensive insights.
In short, 2025 will likely be seen as a year of significant progress by and for the CSDs. By early 2026, there will be a lot more clarity as to how T+1 settlement will be delivered, smoothly, in October 2027. There will be more harmonisation of systems and procedures, a necessary if not sufficient step for CMU. Most importantly, it will be possible for the CSDs to provide concrete examples of how technology has delivered better outcomes for clients.
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