ESMA’s Public Statement regarding T+1 preparations in relation to Regulation (EU) No 909/2014, as amended – key deadlines and action points

TO : Regulated Entities: i. Cyprus Investment Firms ii. Cyprus UCITS Management Companies and Self-Managed Cyprus UCITS iii. Cyprus Alternative Investment Fund Managers and Self-Managed AIFs, including Cyprus sub-threshold AIFMs and Self-Managed AIFs iv. UCITSs’ and AIFs’ Depositaries 1 v. Trading Venues vi. Central Securities Depositories FROM : Cyprus Securities and Exchange Commission DATE : 26 August 2026 CIRCULAR NO. : C797 SUBJECT : ESMA’s Public Statement regarding T+1 preparations in relation to Regulation (EU) No 909/2014, as amended – key deadlines and action points Following Circular C780 in relation to the shortening of the standard securities settlement cycle in the European Union (‘EU’), the Cyprus Securities and Exchange Commission (‘CySEC’) wishes to draw the attention of Regulated Entities to the Public Statement on T+1 preparations (‘the Public Statement’) issued by the European Securities and Markets Authority (‘ESMA’). The Public Statement highlights key deadlines and action points required to support the transition to a T+1 settlement cycle in EU financial markets, including the first regulatory milestone of 7 December 2026 for allocations and confirmations processes. In particular:

1. ESMA reiterates that the transition of EU financial markets to a T+1 settlement cycle on 11 October 2027 requires timely and coordinated preparation by all market participants. While readiness surveys conducted by the EU T+1 Industry Committee indicate increasing awareness and commitment across the industry, implementation progress remains uneven across sectors, markets and firms.
2. The legal and regulatory framework supporting the transition to T+1 settlement has already been established. As the next step towards implementation, ESMA proposed 1 Cyprus entities appointed as UCITS’ and/or AIFs Depositaries, pursuant to Article 23(3) of the AIFM Law 56(I)/2013, as amended, Article 10(2) of the UCITS Law 78(I)/2012, as amended or Article 26(3) of the AIF Law 124(I)/2018 as amended.

amendments 2 to Commission Delegated Regulation (EU) 2018/1229 introducing new requirements that are particularly relevant for the transition to T+1. These amendments have been endorsed by the European Commission and currently are under scrutiny by the European Parliament and the Council. 3. ESMA highlights the following key implementation milestones: a) By 7 December 2026, market participants will be required to comply with the new requirements concerning the allocation and confirmation process, including:

• the timely exchange of allocations and confirmations following trade execution; and
• the default use of internationally recognised electronic communication standards. b) By 11 October 2027, market participants will be required to comply with requirements aimed at optimising the settlement process, including:
• the transmission of settlement instructions sufficiently in advance of the intended settlement date; and
• the use of functionalities supporting efficient settlement processing, where applicable, including auto-partial settlement, hold and release mechanisms, and auto-collateralisation arrangements.

4. ESMA further emphasises the importance of reviewing the entire trading and settlement chain and assessing dependencies on clients, brokers, custodians, central counterparties (CCPs), central securities depositories (CSDs), trading venues, vendors, outsourcing providers and other relevant counterparties.
5. Particular attention should be paid to the quality, completeness and timeliness of settlement-related data. The correct use of reference data and settlement instructions, including, where applicable, Standard Settlement Instructions (SSIs), is essential in order to support straight-through processing and timely settlement.
6. ESMA warns that insufficient preparedness for the T+1 transition may give rise to significant operational, compliance and reputational risks, including increased settlement fails, disrupted interactions with financial market infrastructures, higher implementation costs and difficulties in meeting client expectations. Persistent failures to comply with settlement deadlines may also expose market participants to settlement discipline measures and adversely affect counterparties' willingness to trade. Regulated Entities should take into account both the recommendations issued by the EU T+1 Industry Committee and the amended regulatory requirements under the settlement discipline framework, while accelerating all necessary operational, technological and organisational preparations to ensure full compliance with the applicable requirements within the prescribed deadlines. In addition, Regulated entities should assess not only their own readiness but also that of all relevant parties across the trading and settlement chain, including clients, brokers, custodians, CSD participants, CSDs, CCPs, trading venues, vendors 2 “Final Report on amendments to the RTS on settlement discipline”, European Securities and Markets Authority, ESMA74 2119945926-3430, 13 October 2025

and outsourcing providers. Early end-to-end testing will be important to identify deficiencies, address interdependencies and reduce the risk of disruption when T+1 becomes effective. CySEC expects Regulated Entities falling within the scope of the T+1 transition to continue prioritising their implementation programmes and allocating sufficient resources to ensure timely compliance with the forthcoming regulatory requirements and the successful transition to the T+1 settlement cycle. Yours sincerely, Dr George Theocharides Chairman, Cyprus Securities and Exchange Commission cc. Central Bank of Cyprus