AFME Proposed EU Capital Market Settlement Reforms
Financial services firms should monitor potential unbundling of CSD services and new DLT settlement standards.
Updated on Oct. 6, 2026 in Financial Services
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The Association for Financial Markets in Europe published a position paper in September 2026 advocating for a network-based architecture for European capital markets. The proposal aims to integrate fragmented markets by unbundling Central Securities Depository services and allowing settlement without a central operator.
Why it matters
AFME argues that centralizing settlement creates post-trade monopolies and single points of failure, which complicates operational efficiency. By proposing a competitive service layer, the organization seeks to lower barriers for firms currently constrained by the limited institutional participation in the DLT Pilot Regime.
AFME recommends raising the settlement scheme cap to at least 50 billion euros, a fivefold increase over the current 10 billion euro threshold. It is currently unclear if regulators will accept the proposed inclusion of commercial bank money and e-money tokens for transaction settlement.
The players
Association for Financial Markets in Europe
An industry association representing a broad range of financial institutions that advocates for efficient capital markets and regulatory reform.
The details
The proposal introduces a network layer operated by regulated firms, separating it from a competitive services layer. This model enables DLT account keepers to hold central bank accounts, facilitating transactions without relying on a traditional central operator. By allowing these entities to settle trades independently, AFME intends to move away from the current post-trade monopoly model.
Timeline
May 2026: AFME submitted initial MISP proposals.
September 2026: AFME published its position paper.
October 6, 2026: The proposed changes were detailed in recent reporting.
Market Landscape
The proposal directly addresses the shortcomings of the EU DLT Pilot Regime, which struggled to gain traction among institutional market participants. It seeks to evolve beyond those initial constraints by fundamentally restructuring how central securities depository services function within the EU.
Financial operators should watch for potential policy shifts in the Market Integration and Supervision Package that could redefine settlement competition. Firms should prepare for the possibility of a fivefold increase in settlement caps and the potential integration of e-money tokens.
The takeaway
AFME's push for a network-based architecture suggests a future where settlement is less reliant on legacy central operators. Keepers of financial infrastructure should monitor the status of the Market Integration and Supervision Package to gauge how quickly these competitive standards might be adopted.
Further reading
For broader trends in regional market regulation, visit the Financial Services section.
Source note: This article includes information reported by PostTrade 360°.
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