Firing the starting pistol on T+1
01 April 2025
The UK Accelerated Settlement Taskforce held an industry event to kickstart the move to a shorter settlement cycle. Jack McRae reports
Image: stock.adobe.com/zgphotography
鈥淭his is day one of our journey to T+1,鈥� Andrew Douglas announced to the attendees gathered at KPMG鈥檚 offices in Canary Wharf as the chair of the UK Accelerated Settlement Taskforce (AST) welcomed a new era in financial services at their industry event.
鈥淚t has been a long time coming, we have been talking about this for two years now,鈥� Douglas continues. 鈥淚 hope today we will make some progress towards everyone having a common understanding of what this transition means.鈥�
The industry event, held on 20 February, comes off the back of 11 October 2027 being confirmed as the day the UK will settle securities on a T+1 settlement cycle by the AST and the UK Government.
The UK鈥檚 Chancellor of the Exchequer, Rachel Reeves, had confirmed the date in a meeting with members of J.P. Morgan, Blackrock, Abrdn, Morgan Stanley, Goldman Sachs, Citi, Fidelity, and Schroders the previous day. She said: 鈥淚 am determined to go further and faster to drive growth and put more money into people鈥檚 pockets through our Plan for Change. Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.鈥�
Similarly, Emma Reynolds, Economic Secretary to the Treasury, said she would 鈥渟trongly encourage everyone to read the report thoroughly and use it as a basis to begin your planning and budgeting processes in 2025".
She added: "Moving to T+1 is the right thing to do, and, dare I say it, an exciting time for the financial markets."
Douglas welcomed the government鈥檚 backing but pointed to how the industry now needs to support each other to help achieve this switch. 鈥淚t sounds like it is miles away, but trust me, it isn鈥檛. I remember calling Charlie Geffen two years ago about the Taskforce and that feels like yesterday,鈥� Douglas recalled. 鈥淚 want nothing to happen on 11 October 2027, because we would have already done the work. It will just be like flicking a switch.鈥�
With work already underway to prepare for the monumental shift, Douglas explained that a survey produced by Value Exchange has revealed that 51 per cent of the 150 respondents had already started work on getting ready for T+1.
A statistic that offers a stark warning. 鈥淚f you haven鈥檛 started, you are now in the minority and you have got some catching up to do,鈥� Douglas said. 鈥淚f you鈥檙e in the 49 per cent you need to be asking why haven鈥檛 we started on this? The window closes very rapidly. You鈥檝e got kids, you know those three years will go very quickly.鈥�
The report
The AST has established an implementation plan for the industry to help get firms ready for the moment that lightswitch is flicked to a shorter settlement cycle.
The taskforce has produced 12 鈥榗ritical鈥� actions that must be implemented as soon as possible to help ensure readiness. If the UK is to have as smooth a transition as possible, firms must make steps towards meeting these critical measures.
These critical actions are divided into different areas; scope, settlement, financial market infrastructures (FMI), static data, and securities financing transactions.
Under 鈥榮cope鈥�, critical action 鈥榋ero A鈥� states that the treasury should amend UK CSDR to set the scope of T+1. 鈥榋ero B鈥� requires UK trading venues to amend their rulebooks to reflect the scope of T+1 and 鈥榋ero C鈥� demands that all trading parties must comply with the T+1 obligation.
Under 鈥榮ettlement鈥�, 鈥楽ETT 01鈥� states that all allocation and confirmation processing, where carried out, will be completed as soon as reasonably practicable and electronically using a recognised industry standard and corresponding data dictionary by 31 December 2026.
鈥楽ETT 02鈥� says that all settlement instruction submissions to the central securities depository (CSD) will be completed as soon as is reasonably practicable before the T+1 switch. Meanwhile, 鈥楽ETT 03鈥� says policies and procedures for allocations, confirmations and settlement instructions will be put in place by market participants to ensure they meet the deadlines.
For FMIs, 鈥楩MI 01a鈥� calls for system and process reviews before 31 December 2025.
The report states: 鈥淎ll FMIs, including their third-party providers where appropriate, and Swift, will review all existing procedures, policies, operating frameworks, and technology to ensure that there are no unexpected barriers to T+1, for example in their platform coding.鈥�
鈥楩MI 01b鈥� says that all parties will communicate any proposed updates to their users and implement identified updates as required by 31 December 2026.
鈥楩MI 02鈥� focuses on the EUI鈥檚 CREST modernisation project and the AST recommends changes that benefit operational efficiency and resilience should be prioritised and implemented before T+1, where feasible.
For 鈥榮tatic settlement鈥�, 鈥楽TAT 01鈥� says that 鈥渁ll market participants will implement the core principles and templates contained in the Financial Markets Standard Board鈥檚 (FMSB) Standard for Sharing of SSIs鈥� by 31 December 2026.
Finally, under 鈥榮ecurities financing transactions鈥�, 鈥楽FT 01鈥� calls for the automation of stock lending recalls and 鈥楽FT 02鈥� says that there will be a market cut off for stock lending recalls.
These must be completed by 31 December 2026 and 11 October 2027 (and then ongoing), respectively.
These 12 critical actions have been established by the AST in order to try and ensure the industry can settle securities on a shorter cycle by 11 October 2027. The importance of meeting these actions is underscored by the Financial Conduct Authority (FCA).
Speaking at the AST industry event, Mark Francis, interim director of wholesale markets sell side at the FCA, stressed: 鈥淚f there is only one message I would like you all to take away today is that you should start thinking now and put a plan in place as soon as possible to move to T+1 by the deadline.
鈥淔irms must plan and prepare early for the move to T+1. Firms should not wait until 2027 to put in place relevant changes. Firms must start planning and putting plans into action from now.鈥�
Onto a good thing
鈥淎 shift to T+1 marks an important shift in its financial market infrastructure,鈥� James Maxfield began.
The chief product officer of the data automation company Duco welcomes the benefits a move could bring in terms of reduced counterparty risk and enhanced market efficiency, he believes that "it also introduces significant operational and liquidity challenges that must be addressed well in advance by UK firms".
He added: 鈥淭he UK should look to learn from the challenges that North America has faced in their own shift to a shorter settlement cycle at the end of May 2024. In the UK and Europe, market structures are more fragmented and complex and a priority must be to ensure collateral mobility and cash efficiency.鈥�
Maxfield continues to stress the importance of automation in the preparation for T+1. He points to North America鈥檚 own shift as an example to learn from. 鈥淚n the US, many firms relied on additional headcount rather than technology upgrades to meet the new T+1 deadlines.
鈥淭his is an unsustainable approach for firms in the long-term as it increases their costs, and the UK and EU must take note of this and prioritise trade process automation to avoid this,鈥� he said.
Chris Biddick, managing director of transfer agency at Bravura, explained that 鈥渨e all know T+1 isn鈥檛 a near-term reality for the funds industry. But, the decision to settle the underlying securities on a T+1 basis does create a strong case for change".
鈥淚 believe the legislators are doing the right thing by helping to maintain the UK鈥檚 competitive position and protecting the investor," he commented. "So, we need to find a way for fund managers to transition whole fund ranges to T+2 quickly and efficiently to avoid issues like funding gaps, which could be costly to the industry, and investors.鈥�
Biddick believes that the industry must embrace a DLT-based future and make steps towards digital evolution to ensure the shift to T+1 is smooth.
鈥淐hange is always hard, but firms should use this opportunity to enable their digital strategies and create the bridge they need to accommodate a DLT-based future,鈥� he noted. 鈥淭his means having a digital-first transfer agent to enable any change that comes through at low cost. It also means having one holistic view of all their client and investor transactions 鈥� one connection to all the different fund transaction networks.鈥�
The underlying message across the industry is 鈥榮tart now鈥�. Speakers at the AST industry event compared the event to the firing of a starter鈥檚 gun 鈥� the race has begun.
Biddick is no different in his sentiment. He added: 鈥淭hese are all solutions that are available today and implementations aren鈥檛 as challenging as people think. Fundamentally, if you can reduce risk and cost, whilst getting more control over your liquidity then you are onto a good thing.鈥�
鈥淚t has been a long time coming, we have been talking about this for two years now,鈥� Douglas continues. 鈥淚 hope today we will make some progress towards everyone having a common understanding of what this transition means.鈥�
The industry event, held on 20 February, comes off the back of 11 October 2027 being confirmed as the day the UK will settle securities on a T+1 settlement cycle by the AST and the UK Government.
The UK鈥檚 Chancellor of the Exchequer, Rachel Reeves, had confirmed the date in a meeting with members of J.P. Morgan, Blackrock, Abrdn, Morgan Stanley, Goldman Sachs, Citi, Fidelity, and Schroders the previous day. She said: 鈥淚 am determined to go further and faster to drive growth and put more money into people鈥檚 pockets through our Plan for Change. Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.鈥�
Similarly, Emma Reynolds, Economic Secretary to the Treasury, said she would 鈥渟trongly encourage everyone to read the report thoroughly and use it as a basis to begin your planning and budgeting processes in 2025".
She added: "Moving to T+1 is the right thing to do, and, dare I say it, an exciting time for the financial markets."
Douglas welcomed the government鈥檚 backing but pointed to how the industry now needs to support each other to help achieve this switch. 鈥淚t sounds like it is miles away, but trust me, it isn鈥檛. I remember calling Charlie Geffen two years ago about the Taskforce and that feels like yesterday,鈥� Douglas recalled. 鈥淚 want nothing to happen on 11 October 2027, because we would have already done the work. It will just be like flicking a switch.鈥�
With work already underway to prepare for the monumental shift, Douglas explained that a survey produced by Value Exchange has revealed that 51 per cent of the 150 respondents had already started work on getting ready for T+1.
A statistic that offers a stark warning. 鈥淚f you haven鈥檛 started, you are now in the minority and you have got some catching up to do,鈥� Douglas said. 鈥淚f you鈥檙e in the 49 per cent you need to be asking why haven鈥檛 we started on this? The window closes very rapidly. You鈥檝e got kids, you know those three years will go very quickly.鈥�
The report
The AST has established an implementation plan for the industry to help get firms ready for the moment that lightswitch is flicked to a shorter settlement cycle.
The taskforce has produced 12 鈥榗ritical鈥� actions that must be implemented as soon as possible to help ensure readiness. If the UK is to have as smooth a transition as possible, firms must make steps towards meeting these critical measures.
These critical actions are divided into different areas; scope, settlement, financial market infrastructures (FMI), static data, and securities financing transactions.
Under 鈥榮cope鈥�, critical action 鈥榋ero A鈥� states that the treasury should amend UK CSDR to set the scope of T+1. 鈥榋ero B鈥� requires UK trading venues to amend their rulebooks to reflect the scope of T+1 and 鈥榋ero C鈥� demands that all trading parties must comply with the T+1 obligation.
Under 鈥榮ettlement鈥�, 鈥楽ETT 01鈥� states that all allocation and confirmation processing, where carried out, will be completed as soon as reasonably practicable and electronically using a recognised industry standard and corresponding data dictionary by 31 December 2026.
鈥楽ETT 02鈥� says that all settlement instruction submissions to the central securities depository (CSD) will be completed as soon as is reasonably practicable before the T+1 switch. Meanwhile, 鈥楽ETT 03鈥� says policies and procedures for allocations, confirmations and settlement instructions will be put in place by market participants to ensure they meet the deadlines.
For FMIs, 鈥楩MI 01a鈥� calls for system and process reviews before 31 December 2025.
The report states: 鈥淎ll FMIs, including their third-party providers where appropriate, and Swift, will review all existing procedures, policies, operating frameworks, and technology to ensure that there are no unexpected barriers to T+1, for example in their platform coding.鈥�
鈥楩MI 01b鈥� says that all parties will communicate any proposed updates to their users and implement identified updates as required by 31 December 2026.
鈥楩MI 02鈥� focuses on the EUI鈥檚 CREST modernisation project and the AST recommends changes that benefit operational efficiency and resilience should be prioritised and implemented before T+1, where feasible.
For 鈥榮tatic settlement鈥�, 鈥楽TAT 01鈥� says that 鈥渁ll market participants will implement the core principles and templates contained in the Financial Markets Standard Board鈥檚 (FMSB) Standard for Sharing of SSIs鈥� by 31 December 2026.
Finally, under 鈥榮ecurities financing transactions鈥�, 鈥楽FT 01鈥� calls for the automation of stock lending recalls and 鈥楽FT 02鈥� says that there will be a market cut off for stock lending recalls.
These must be completed by 31 December 2026 and 11 October 2027 (and then ongoing), respectively.
These 12 critical actions have been established by the AST in order to try and ensure the industry can settle securities on a shorter cycle by 11 October 2027. The importance of meeting these actions is underscored by the Financial Conduct Authority (FCA).
Speaking at the AST industry event, Mark Francis, interim director of wholesale markets sell side at the FCA, stressed: 鈥淚f there is only one message I would like you all to take away today is that you should start thinking now and put a plan in place as soon as possible to move to T+1 by the deadline.
鈥淔irms must plan and prepare early for the move to T+1. Firms should not wait until 2027 to put in place relevant changes. Firms must start planning and putting plans into action from now.鈥�
Onto a good thing
鈥淎 shift to T+1 marks an important shift in its financial market infrastructure,鈥� James Maxfield began.
The chief product officer of the data automation company Duco welcomes the benefits a move could bring in terms of reduced counterparty risk and enhanced market efficiency, he believes that "it also introduces significant operational and liquidity challenges that must be addressed well in advance by UK firms".
He added: 鈥淭he UK should look to learn from the challenges that North America has faced in their own shift to a shorter settlement cycle at the end of May 2024. In the UK and Europe, market structures are more fragmented and complex and a priority must be to ensure collateral mobility and cash efficiency.鈥�
Maxfield continues to stress the importance of automation in the preparation for T+1. He points to North America鈥檚 own shift as an example to learn from. 鈥淚n the US, many firms relied on additional headcount rather than technology upgrades to meet the new T+1 deadlines.
鈥淭his is an unsustainable approach for firms in the long-term as it increases their costs, and the UK and EU must take note of this and prioritise trade process automation to avoid this,鈥� he said.
Chris Biddick, managing director of transfer agency at Bravura, explained that 鈥渨e all know T+1 isn鈥檛 a near-term reality for the funds industry. But, the decision to settle the underlying securities on a T+1 basis does create a strong case for change".
鈥淚 believe the legislators are doing the right thing by helping to maintain the UK鈥檚 competitive position and protecting the investor," he commented. "So, we need to find a way for fund managers to transition whole fund ranges to T+2 quickly and efficiently to avoid issues like funding gaps, which could be costly to the industry, and investors.鈥�
Biddick believes that the industry must embrace a DLT-based future and make steps towards digital evolution to ensure the shift to T+1 is smooth.
鈥淐hange is always hard, but firms should use this opportunity to enable their digital strategies and create the bridge they need to accommodate a DLT-based future,鈥� he noted. 鈥淭his means having a digital-first transfer agent to enable any change that comes through at low cost. It also means having one holistic view of all their client and investor transactions 鈥� one connection to all the different fund transaction networks.鈥�
The underlying message across the industry is 鈥榮tart now鈥�. Speakers at the AST industry event compared the event to the firing of a starter鈥檚 gun 鈥� the race has begun.
Biddick is no different in his sentiment. He added: 鈥淭hese are all solutions that are available today and implementations aren鈥檛 as challenging as people think. Fundamentally, if you can reduce risk and cost, whilst getting more control over your liquidity then you are onto a good thing.鈥�
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