Firms must move faster to prepare for T+1
Two thirds of the global investment industry is now preparing for the UK’s transition to a shorter settlement window, but more firms should act now to avoid a last minute scramble, says Chris Elms
A new survey of financial firms reveals that almost two thirds of the global investment industry is now actively preparing for the UK’s transition to T+1 by 2027, which will see share trades settled in just one day after the transaction date. But with many at risk of missing key deadlines, market participants must act.
This move to accelerate the settlement of trades is part of the broader efforts to enhance the efficiency and security of financial markets.
While this change may sound technical, the impact will be felt by anyone involved in buying or selling shares. Currently, it takes two business days after a trade for the money and the shares to be exchanged, which can create risk and tie up capital. Moving to T+1 will shorten this window, reducing exposure to things going wrong, and helping markets to run more efficiently.
Momentum is building towards this change. The UK’s financial system is being guided by the Accelerated Settlement Taskforce chaired by Andrew Douglas and has set out a clear roadmap and research reveals that 62 per cent of firms have started to prepare.
But findings also reveal that while firms are engaged, many are waiting until 2026 to act, and that could be too late.
The survey covered more than 550 respondents worldwide, and one of the most striking takeaways is that one in four respondents thinks they might miss the key deadline at the end of 2026, when trades will need to be confirmed on the same day they’re made. That’s a crucial milestone ahead of the full switch to T+1 in October 2027.
Shift gears
Now is the moment for UK market participants to shift gears from planning and assessment to hands-on implementation.
Those with experience of the T+1 transition in North America last year believe they are ahead of the curve, and many are using that investment to help them prepare for the UK move. By acting now, firms can avoid a last-minute scramble and ensure that they benefit from the switch.
T+1 will bring real advantages. Faster settlement reduces risk, speeds up how quickly capital can be reused, and encourages smoother, more resilient markets. While this may take effort, including upgrading systems and processes, the benefits are worth it.
Faster settlement reduces risk, speeds up how quickly capital can be reused, and encourages smoother, more resilient markets
This is a collective endeavour, from fund managers and brokers to regulators, every part of the financial sector needs to work together. Financial market infrastructure also has a crucial role play in delivering a smooth transition and getting this right will ensure that the UK retains its position as a leading financial hub.
The message from the survey is clear. While the industry is engaged, it’s time to deliver, T+1 is coming, and it’s up to all of us to make it happen.
This is a once-in-a-generation opportunity to modernise the UK’s post-trade infrastructure. It’s a chance to bring our market in line with global peers and boost our competitiveness as a financial centre. But to get there, we need firms to accelerate their preparations now and make use of the resources and technology available.
Chris Elms is CEO and executive director of Euroclear UK & International (EUI), the supporting partner of the Accelerated Settlement Taskforce