T+2 Settlement Cycle Implementation

A number of CEE markets are expected to adjust its settlement cycle to T+2 in October 2014. We present the migration schedule, additional migration considerations and their impact.
Mon, 14/04/2014


Driven by the requirements of the Central Securities Depository Regulation (CSDR), which is in the process of being adopted, several markets in CEE will be moving to T+2 settlement cycle in October 2014.

Most clients are already in the process of planning for this event, which will have an impact, especially in higher volume markets, on securities positioning and funding both on the migration date (where two trading days settlement will take place on a single day) and thereafter, where shorter dated foreign exchange and more active use of (where available) credit lines may be in scarce supply.

We summarise below the actions being taken across CEE and the impacts.


Migration Schedule


A summary of the dates of the planned migrations to T+2 in the CEE markets covered by UniCredit GSS is presented below:

Austria - 6 October 2014

Bosnia and Herzegovina - out of scope (settlement cycle is T+3 and a switch is not immediately planned)

Bulgaria - settlement cycle is already T+2

Croatia - 6 October 2014

Czech Republic - 6 October 2014

Hungary - 6 October 2014

Poland - 6 October 2014

Romania - no decision taken yet

Russia - out of scope (settlement cycle varies, normally from T+0 to T+3, but can go beyond that as well)

Serbia - out of scope (settlement cycle is normally T+3, but can be negotiated down to T+0)

Slovak Republic - 6 October 2014

Slovenia - settlement cycle is already T+2

Ukraine - out of scope (settlement cycle is normally T+3, but can be negotiated down to T+0)


Additional Migration Considerations


EU Level Coordination

At this stage it is not envisaged that there will be EU coordination of the migration to T+2 (including monitoring prior to and after the switch).

There is no EU wide testing envisaged to take place.

There is no plan to have common EU approach to the application of penalties and buy-ins resulting from the migration to T+2.


Matching and Instructing

The switch to T+2 in the above markets will be trade date driven. For example, for the markets moving to T+2 on 6 October 2014, the last date on which trading will be done with T+3 settlement will be Friday, 3 October 2014, and from Monday, 6 October 2014, trading will be based on T+2 settlement. Thus, on Wednesday, 8 October 2014, the market infrastructures in these markets will have to process the settlement volumes from trading on both 3 October 2014 and 6 October. Market participants should therefore confirm and match their trades and send their settlement instructions as early as possible.



As a result of the increased settlement volume on 8 October 2014, it is essential to make sure that sufficient funding is made available (in the form of either cash or overdraft facilities). At present, in all of the CEE currencies impacted by the migration - CZK, HRK, HUF, PLN - it is possible to exchange foreign currency with tom value date and subject to prior arrangement with same day value date as well.


OTC Transactions

The migration to T+2 is envisaged to cover transactions in transferrable securities executed on trading venues. CSDR explicitly states that T+2 shall not apply to OTC transactions (transactions which are negotiated privately but executed on a trading venue, transactions which are executed bilaterally but reported to a trading venue). However, historically, the settlement cycle for OTC transactions has normally followed that for on-exchange transactions. In addition, as the trading of many instruments can take place both on-exchange and OTC, if OTC transactions do not move to T+2 as well, there is a risk that settlement failures and funding deficiencies may increase. So therefore, the settlement cycle for OTC transactions can also be expected to switch to T+2 unless the parties to a transaction explicitly agree otherwise.


Primary Market Transactions

According to CSDR T+2 shall not apply to primary market transactions (the first transactions where the transferable securities concerned are subject to initial recording in book-entry form).


Investment Fund Shares

UCITS shares are not considered transferable securities under the definitions of the current EU legislation and therefore are out of scope of the switch to T+2. However, ETF shares are considered transferrable securities and should be in the scope of the migration to T+2.



Derivative contracts are not considered transferable securities and therefore are excluded from the scope of CSDR. However, certain types of derivative contracts (e.g. warrants, options, futures or other types of exchange traded derivatives) may involve upon exercise and expiration the settlement of transferrable securities - it would be advisable in such case for these to also abide by the T+2 settlement cycle.


Corporate Actions

To the extent possible, major corporate actions should be avoided around the migration period. The changes arising out of the migration to T+2 should be clearly understood and communicated well in advance.


If you would like to discuss the topic further or require additional details, please do contact our relationship and operational teams, both at central and local level. We are at your disposal to make sure that you receive timely and efficient support with regards to your activities in our markets.


Impact on Investors: The migration to T+2 will require adjustments to the way investors carry out their activities (e.g. securities positioning, cash funding, instructing) in the impacted markets.