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A recent report from the UK Accelerated Settlement Taskforce’s T+1 technical group has laid out draft recommendations for the country’s transition to a shorter settlement cycle, from T+2 to T+1, by 2027. The report details how the transition will be implemented and how firms should begin preparing for the shift.
Industry stakeholders have urged the UK, EU, and Switzerland to align their settlement cycles to avoid costly delays in securities trades. The United States made the switch to T+1 earlier this year, setting a precedent for global markets.
Andrew Douglas, chair of the taskforce group, stated in an interview with Bloomberg that while it would be ideal for the UK, EU, and Switzerland to transition at the same time, the decision ultimately lies with the EU and Switzerland to determine if a coordinated migration is feasible.
Though the EU has not dismissed the possibility of adopting T+1 by late 2027, it has not committed to a specific date, with some projections suggesting a potential shift in 2028.
In the event that the transitions are not synchronized, the UK report recommends that certain financial instruments, such as Exchange-Traded Products (ETPs) and Eurobonds, should be temporarily exempt from the UK’s T+1 settlement cycle until the EU and Switzerland implement their own transitions.
Additionally, the report calls for mandatory operational changes, regardless of the T+1 migration date. These changes include market standards for trade allocations and confirmations, along with electronic processes for exchanging Standard Settlement Instructions (SSIs), all of which should be in place by 2025. These measures are aimed at ensuring the industry is well-prepared for the shift to T+1 when it occurs.
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