Spilling the T+1
02 Oct 2024
At InvestOps Europe 2024 at The Oval, Charlie Geffen and Andrew Douglas updated the industry on the UK’s path towards T+1
Image: dorin/stock.adobe.com
Charlie Geffen, chair of the Accelerated Settlements Taskforce, and Andrew Douglas, chair of the UK T+1 Task Force Technical Group, offered optimistic but direct advice as the UK’s asset servicing industry gears up for a shift to a T+1 trade settlement cycle.
Speaking at the Investops Europe conference, the pair reflected on their work in leading the transition and the lessons that they have learnt from North America’s shift in May 2024.
Geffen, who led the Accelerated Settlement Taskforce, published the group’s report on the shift in March. He explained that the report offered “ten recommendations, all of which the government accepted.”
“The key recommendations were that the transition by the UK to T+1 should happen by no later than the end of 2027, that in order to ensure a smooth transition certain operational changes should take place by no later than the end of 2025 and crucially the creation of the UK T+1 Task Force Technical Group to be chaired by Andrew,” Geffen said, gesturing towards Douglas in the chair next to him.
So what has the technical group achieved?
Keep it simple, stupid
Douglas chairs the group and spoke with pride at the “450 volunteers who operate as part of the technical group, and they represent 160 different firms from every constituency within the trading settlement life cycle.”
Throughout the panel discussion, Geffen and Douglas spoke openly and towards the audience, inviting and opening the discussion of the UK’s path to T+1. This is reflective of the reports that they have and are trying to create, including the Draft Recommendations Report and Consultation published on 27 September after the panel discussion.
“This [report] has been you deciding what you need to do in order for T+1 to be successful, I can’t emphasise that enough. We have been busy, there are 59 recommendations [in the new report],” Douglas explained before urging. “If you have comments, if there’s anything we’ve missed, feel free to point that out. If there’s things in there that you don’t agree with, feel free to respond. This is one of the unique approaches that we have used here in the UK, this is very much a collaborative effort, and I want people to feel some sort of ownership.”
Douglas was keen to keep the discussion digestible and engaging. He joked that “there are two things that we all want in life. We want clarity and we want certainty.”
He continued to situate this attitude within the context of the shift to T+1 in the UK by suggesting that people want to know what they have to do to be prepared for the transition and when they have to be ready by. Douglas hopes that they can provide those answers.
“What we will try to implement for the end of year report, is making the recommendations interactive. So if you’re a fund manager, you type in asset manager and it will sort all of the recommendations and tell you what you need to be concerned about, and these are the dates by which you need to achieve these,” Douglas explained.
“It’s the old KISS principle — keep it simple, stupid. That’s the motto that our working group has worked with.”
The future is automated
North America completed their shift to a shortened trading settlement cycle in May and have given their British and European counterparts plenty to consider. Geffen and Douglas are keen to stress the differences in the markets that have to be considered.
Douglas explored how as the UK is “slap-bang in the middle of the time zones”, all plans to move to T+1 must consider the North American and APAC markets in equal measure. What I don’t want is a solution which is half the time, twice as expensive, or half the time and half the investors — they’re not solutions to further the marketplace. So we have tried to be inclusive,” he said.
One key lesson the men leading the UK towards a T+1 shift agreed upon is the importance of automation within the trade cycle.
“There is a lot of talk about firms [in the US] having to throw bodies at the solution because they didn’t get the memo that said you should be automated,” Douglas said.
“I can’t emphasise enough how important it will be when you see what you will have to do, what your firm will have to do, that there is a significant proportion of what you will need to do that will be around automation.”
The discussion strongly advised the industry that it needs to be ready to automate, and the sooner it will be ready, the better. The message has since been reiterated in the report published last week.
Douglas warned: “I can’t force people to automate, the regulators can’t force people to automate, but received wisdom from the experience in the US is you don’t automate at your peril.”
A date with destiny
“We’ve got a pretty clear process now,” Geffen said plainly.
“The interim report will come out , followed by a period of consultation and then a final report will come out at the end of the year. The indication is the government will at that point, formally adopt it and set the recommendations.”
T+1 will happen, but when?
Geffen remembered how, “in June, Gary Gensler, the chair of SEC, was asked ‘what is your tip for a successful UK transition?’ And he said: ‘Pick a date, stick with it.’”
To the overhanging question, Douglas humoured the audience by recalling his love of Sherlock Holmes stories as a child and replicating the detective’s skills of deduction. He read how Holmes would focus on eliminating all possibilities until the solution, “no matter how ridiculous”, is left.
Douglas began his own Holmesian deduction: “We’ve started to eliminate dates and have got ourselves to a point where it will probably be sometime in October 2027. We probably won’t go on [school] half-term and we probably won’t go on Halloween. We want to avoid dividend season and we want to avoid rebalancing. We want to avoid the holiday season. So gradually, as you eliminate those dates, you end up with something that approximates the date.”
“I think we will have a choice for sometime in Q4 2027. We’re not going to go around Christmas. So it is October or November. That [narrows the date to] choosing between seven, six or seven weekends.”
The UK move to T+1 will happen late in 2027, but whether the industry will be ready to adopt the necessary steps to facilitate a smooth transition remains to be seen.
Speaking at the Investops Europe conference, the pair reflected on their work in leading the transition and the lessons that they have learnt from North America’s shift in May 2024.
Geffen, who led the Accelerated Settlement Taskforce, published the group’s report on the shift in March. He explained that the report offered “ten recommendations, all of which the government accepted.”
“The key recommendations were that the transition by the UK to T+1 should happen by no later than the end of 2027, that in order to ensure a smooth transition certain operational changes should take place by no later than the end of 2025 and crucially the creation of the UK T+1 Task Force Technical Group to be chaired by Andrew,” Geffen said, gesturing towards Douglas in the chair next to him.
So what has the technical group achieved?
Keep it simple, stupid
Douglas chairs the group and spoke with pride at the “450 volunteers who operate as part of the technical group, and they represent 160 different firms from every constituency within the trading settlement life cycle.”
Throughout the panel discussion, Geffen and Douglas spoke openly and towards the audience, inviting and opening the discussion of the UK’s path to T+1. This is reflective of the reports that they have and are trying to create, including the Draft Recommendations Report and Consultation published on 27 September after the panel discussion.
“This [report] has been you deciding what you need to do in order for T+1 to be successful, I can’t emphasise that enough. We have been busy, there are 59 recommendations [in the new report],” Douglas explained before urging. “If you have comments, if there’s anything we’ve missed, feel free to point that out. If there’s things in there that you don’t agree with, feel free to respond. This is one of the unique approaches that we have used here in the UK, this is very much a collaborative effort, and I want people to feel some sort of ownership.”
Douglas was keen to keep the discussion digestible and engaging. He joked that “there are two things that we all want in life. We want clarity and we want certainty.”
He continued to situate this attitude within the context of the shift to T+1 in the UK by suggesting that people want to know what they have to do to be prepared for the transition and when they have to be ready by. Douglas hopes that they can provide those answers.
“What we will try to implement for the end of year report, is making the recommendations interactive. So if you’re a fund manager, you type in asset manager and it will sort all of the recommendations and tell you what you need to be concerned about, and these are the dates by which you need to achieve these,” Douglas explained.
“It’s the old KISS principle — keep it simple, stupid. That’s the motto that our working group has worked with.”
The future is automated
North America completed their shift to a shortened trading settlement cycle in May and have given their British and European counterparts plenty to consider. Geffen and Douglas are keen to stress the differences in the markets that have to be considered.
Douglas explored how as the UK is “slap-bang in the middle of the time zones”, all plans to move to T+1 must consider the North American and APAC markets in equal measure. What I don’t want is a solution which is half the time, twice as expensive, or half the time and half the investors — they’re not solutions to further the marketplace. So we have tried to be inclusive,” he said.
One key lesson the men leading the UK towards a T+1 shift agreed upon is the importance of automation within the trade cycle.
“There is a lot of talk about firms [in the US] having to throw bodies at the solution because they didn’t get the memo that said you should be automated,” Douglas said.
“I can’t emphasise enough how important it will be when you see what you will have to do, what your firm will have to do, that there is a significant proportion of what you will need to do that will be around automation.”
The discussion strongly advised the industry that it needs to be ready to automate, and the sooner it will be ready, the better. The message has since been reiterated in the report published last week.
Douglas warned: “I can’t force people to automate, the regulators can’t force people to automate, but received wisdom from the experience in the US is you don’t automate at your peril.”
A date with destiny
“We’ve got a pretty clear process now,” Geffen said plainly.
“The interim report will come out , followed by a period of consultation and then a final report will come out at the end of the year. The indication is the government will at that point, formally adopt it and set the recommendations.”
T+1 will happen, but when?
Geffen remembered how, “in June, Gary Gensler, the chair of SEC, was asked ‘what is your tip for a successful UK transition?’ And he said: ‘Pick a date, stick with it.’”
To the overhanging question, Douglas humoured the audience by recalling his love of Sherlock Holmes stories as a child and replicating the detective’s skills of deduction. He read how Holmes would focus on eliminating all possibilities until the solution, “no matter how ridiculous”, is left.
Douglas began his own Holmesian deduction: “We’ve started to eliminate dates and have got ourselves to a point where it will probably be sometime in October 2027. We probably won’t go on [school] half-term and we probably won’t go on Halloween. We want to avoid dividend season and we want to avoid rebalancing. We want to avoid the holiday season. So gradually, as you eliminate those dates, you end up with something that approximates the date.”
“I think we will have a choice for sometime in Q4 2027. We’re not going to go around Christmas. So it is October or November. That [narrows the date to] choosing between seven, six or seven weekends.”
The UK move to T+1 will happen late in 2027, but whether the industry will be ready to adopt the necessary steps to facilitate a smooth transition remains to be seen.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
