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

The European Central Bank has highlighted next-day securities settlement and tokenisation as two forces reshaping Europe’s financial infrastructure. The shift toward T+1 settlement—matching the move already made in other major markets—compresses the window between trade and final settlement, reducing the time available for confirmation, funding and fails management. For market participants, that means operational readiness becomes a competitive and risk-management priority, not just a back-office concern.

Tokenisation, the representation of securities or cash on distributed ledgers, is presented alongside this shift as part of a broader transformation of market plumbing. Its potential lies in faster, more programmable settlement and collateral movement, though questions around legal finality, interoperability and oversight remain open.

What to watch: the ECB’s work on settlement efficiency, industry testing timelines for T+1, and any pilot activity exploring tokenised settlement. For investors, the relevance is indirect but real—settlement changes can affect liquidity, funding costs and operational risk across European markets. The direction of travel is toward shorter cycles and greater digitalisation; the pace and scope will depend on coordinated implementation.