Firing the starting pistol on T+1
05 Mar 2025
On 20 February, the UK Accelerated Settlement Taskforce held an industry event to kickstart the move to a shorter settlement cycle
Image: andres_mejia/stock.adobe.com
“This is day one of our journey to T+1,” Andrew Douglas announced to the attendees gathered at KPMG’s 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.
“It has been a long time coming, we have been talking about this for two years now,” Douglas continues. “I hope today we will make some progress towards everyone having a common understanding of what this transition means.”
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’s 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: “I am determined to go further and faster to drive growth and put more money into people’s pockets through our Plan for Change. Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.”
Similarly, Emma Reynolds, Economic Secretary to the Treasury, said she would “strongly encourage everyone to read the report thoroughly and use it as a basis to begin your planning and budgeting processes in 2025.
“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’s backing but pointed to how the industry now needs to support each other to help achieve this switch. “It sounds like it is miles away, but trust me, it isn’t. I remember calling Charlie Geffen two years ago about the Taskforce and that feels like yesterday,” Douglas recalled. “I want nothing to happen on 11 October 2025, because we would have already done the work. It will just be like flicking a switch.”
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. “If you haven’t started, you are now in the minority and you have got some catching up to do,” Douglas said. “If you’re in the 49 per cent you need to be asking why haven’t we started on this? The window closes very rapidly. You’ve got kids, you know those three years will go very quickly.”
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 ‘critical’ 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 ‘scope’, critical action ‘Zero A’ states that the treasury should amend UK CSDR to set the scope of T+1. ‘Zero B’ requires UK trading venues to amend their rulebooks to reflect the scope of T+1 and ‘Zero C’ demands that all trading parties must comply with the T+1 obligation.
Under ‘settlement’, ‘SETT 01’ 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.
‘SETT 02’ 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, ‘SETT 03’ 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, ‘FMI 01a’ calls for system and process reviews before 31 December 2025.
The report states: “All 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.”
‘FMI 01b’ says that all parties will communicate any proposed updates to their users and implement identified updates as required by 31 December 2026.
‘FMI 02’ focuses on the EUI’s 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 ‘static settlement’, ‘STAT 01’ says that “all market participants will implement the core principles and templates contained in the Financial Markets Standard Board’s (FMSB) Standard for Sharing of SSIs” by 31 December 2026.
Finally, under ‘securities financing transactions’, ‘SFT 01’ calls for the automation of stock lending recalls and ‘SFT 02’ 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: “If 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.
“Firms 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.”
Onto a good thing
“A shift to T+1 marks an important shift in its financial market infrastructure,” James Maxfield begins.
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.
“The 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.”
Maxfield continues to stress the importance of automation in the preparation for T+1. He points to North America’s own shift as an example to learn from. “In the US, many firms relied on additional headcount rather than technology upgrades to meet the new T+1 deadlines.
“This 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,” he says.
Chris Biddick, managing director of transfer agency at Bravura, explains that “we all know T+1 isn’t 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.
“I believe the legislators are doing the right thing by helping to maintain the UK’s competitive position and protecting the investor. 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.”
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.
“Change 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,” he explains. “This 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 — one connection to all the different fund transaction networks.”
The underlying message across the industry is ‘start now’. Speakers at the AST industry event compared the event to the firing of a starter’s gun — the race has begun.
Biddick is no different in his sentiment. He adds: “These are all solutions that are available today and implementations aren’t 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.”
“It has been a long time coming, we have been talking about this for two years now,” Douglas continues. “I hope today we will make some progress towards everyone having a common understanding of what this transition means.”
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’s 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: “I am determined to go further and faster to drive growth and put more money into people’s pockets through our Plan for Change. Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.”
Similarly, Emma Reynolds, Economic Secretary to the Treasury, said she would “strongly encourage everyone to read the report thoroughly and use it as a basis to begin your planning and budgeting processes in 2025.
“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’s backing but pointed to how the industry now needs to support each other to help achieve this switch. “It sounds like it is miles away, but trust me, it isn’t. I remember calling Charlie Geffen two years ago about the Taskforce and that feels like yesterday,” Douglas recalled. “I want nothing to happen on 11 October 2025, because we would have already done the work. It will just be like flicking a switch.”
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. “If you haven’t started, you are now in the minority and you have got some catching up to do,” Douglas said. “If you’re in the 49 per cent you need to be asking why haven’t we started on this? The window closes very rapidly. You’ve got kids, you know those three years will go very quickly.”
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 ‘critical’ 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 ‘scope’, critical action ‘Zero A’ states that the treasury should amend UK CSDR to set the scope of T+1. ‘Zero B’ requires UK trading venues to amend their rulebooks to reflect the scope of T+1 and ‘Zero C’ demands that all trading parties must comply with the T+1 obligation.
Under ‘settlement’, ‘SETT 01’ 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.
‘SETT 02’ 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, ‘SETT 03’ 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, ‘FMI 01a’ calls for system and process reviews before 31 December 2025.
The report states: “All 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.”
‘FMI 01b’ says that all parties will communicate any proposed updates to their users and implement identified updates as required by 31 December 2026.
‘FMI 02’ focuses on the EUI’s 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 ‘static settlement’, ‘STAT 01’ says that “all market participants will implement the core principles and templates contained in the Financial Markets Standard Board’s (FMSB) Standard for Sharing of SSIs” by 31 December 2026.
Finally, under ‘securities financing transactions’, ‘SFT 01’ calls for the automation of stock lending recalls and ‘SFT 02’ 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: “If 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.
“Firms 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.”
Onto a good thing
“A shift to T+1 marks an important shift in its financial market infrastructure,” James Maxfield begins.
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.
“The 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.”
Maxfield continues to stress the importance of automation in the preparation for T+1. He points to North America’s own shift as an example to learn from. “In the US, many firms relied on additional headcount rather than technology upgrades to meet the new T+1 deadlines.
“This 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,” he says.
Chris Biddick, managing director of transfer agency at Bravura, explains that “we all know T+1 isn’t 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.
“I believe the legislators are doing the right thing by helping to maintain the UK’s competitive position and protecting the investor. 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.”
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.
“Change 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,” he explains. “This 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 — one connection to all the different fund transaction networks.”
The underlying message across the industry is ‘start now’. Speakers at the AST industry event compared the event to the firing of a starter’s gun — the race has begun.
Biddick is no different in his sentiment. He adds: “These are all solutions that are available today and implementations aren’t 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.”
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