Next-day securities settlement, tokenisation and the transformation of Europe’s financial infrastructure - European Central Bank

The European Central Bank has highlighted the move toward next-day securities settlement, known as T+1, alongside tokenisation as forces reshaping Europe's financial infrastructure. T+1 shortens the time between a trade and its settlement from two days to one, reducing the window in which counterparties carry exposure to a pending transaction. Tokenisation—representing securities or cash as digital tokens on distributed ledgers—is framed as a complementary shift that could make settlement faster and more automated.

The market relevance lies in operational readiness. A shorter settlement cycle compresses the time firms have to confirm trades, allocate positions and resolve mismatches, placing greater demands on back-office systems and cross-border coordination. Europe's fragmented market structure, with multiple trading venues, central securities depositories and currencies, makes harmonisation a central challenge. Tokenisation raises further questions about legal finality, custody and how digital representations interact with existing market infrastructure.

For market participants, the key issues to watch are the pace and scope of regulatory coordination, the industry's testing of shortened settlement workflows, and whether tokenisation pilots move from experimentation toward live infrastructure. The direction of travel is toward faster, more integrated settlement—but the timeline and practical details remain the variables that matter most.