ESMA guidelines on allocations and confirmations for T+1

Before a trade between an investment firm and a professional client, such as a fund manager, can settle, the client states how to split it across its accounts (the allocation) and both sides agree its terms (the confirmation). Article 6(2) of the Central Securities Depositories Regulation (CSDR) (external site) requires investment firms to arrange prompt allocations and confirmations with professional clients, to limit settlement fails. Guidelines of the European Securities and Markets Authority (ESMA) set standard procedures and message formats for this exchange, and ESMA has revised them for settlement one business day after the trade (T+1).

The consultation of May 2026 (external site) proposed to remove oral and other non-machine-readable allocations and confirmations, except during temporary technical disruptions. In such cases mail, fax or recorded phone calls remain possible. Email and graphical user interfaces can comply under certain conditions.

The guidelines explain how to comply with the amended settlement discipline standards, according to ESMA (external site). Those standards set electronic, machine-readable formats and a deadline of 23:00 Central European Time (CET) on the trade date for professional clients, as ESMA's final report on the standards states (external site).

As an example, an order executed at 15:00 for a fund manager with five funds is split across the five funds and confirmed by 23:00 the same evening, within the trade-date deadline (external site).

The guidelines address investment firms and their professional clients, a group that includes banks and asset managers, as ESMA's announcement sets out (external site). Roles directly affected include:

• Confirmations Analyst: confirmations move to standard electronic messages within the trade date.
• Middle Office Analyst: client allocations are received, checked and matched to executions before the evening deadline.
• Investment Operations Analyst: on the client side, allocations are sent in machine-readable form on the trade date.
• Settlements Analyst: matched allocations feed settlement instructions that are due the same day.

ESMA consulted on the revision (external site) from 26 May 2026 and published its final report on the guidelines on 16 October 2026, as ESMA announced (external site).

The new allocation and confirmation requirements apply from 7 December 2026, a confirmed date in the same announcement (external site). The EU switch to T+1 follows on 11 October 2027, set by Regulation (EU) 2025/2075 (external site).

The revision replaces the allocation and confirmation guidelines of 2019, according to ESMA's consultation (external site). It reflects the mandatory use of electronic, standardised communication channels and international messaging standards.

Under the original technical standards, investment firms confirm receipt of a written allocation and confirmation within two hours, in Delegated Regulation (EU) 2018/1229 (external site). With T+1, the whole exchange moves to the trade date.