T+1 settlement: Fight or flight for global markets
02 September 2025
The clock is ticking for the UK鈥檚 October 2027 cutover to T+1, with regulators, infrastructures, and firms urging action now to avoid turbulence later. Zarah Choudhary reports
Image: stock.adobe.com/kanet
You have just landed in Doha on a connection from London to Tokyo. Your next flight departs in 45 minutes, you are on the other side of the terminal, and your luggage needs to be transferred before you can board. One delay, one wrong turn, and you 鈥� or your bags 鈥� miss the flight.
That is what post-trade operations feel like under T+1 settlement. The journey from trade execution to final settlement has not changed in distance, but the layover has been cut from two days to one.
According to the Association for Financial Markets in Europe (AFME), that means an 83 per cent cut in the time available 鈥� instead of around 12 operational hours to complete critical steps, firms now have just two.
This shorter window touches every part of the post-trade process. Cash forecasting and liquidity management can no longer be handled at the end of the day, but need to happen close to real time so that funding decisions are made before trading closes.
Trade capture has to be accurate straight away, leaving little room to fix mistakes. Foreign exchange transactions, especially for non-US investors, need to be executed almost immediately if dollars are to be ready for settlement the following day. Even reconciliations, which once took place the next morning, now need to move into the same day, supported by better data and automation.
鈥淥ps teams particularly have had to think 鈥榳hat鈥檚 the time in New York鈥� with clarity and precision to get all the tasks done in time,鈥� says Gerard Walsh, global head of market solutions, banking and markets, Northern Trust Asset Servicing.
Same route, less time
The US 网爆吃瓜 and Exchange Commission (SEC) confirmed in February 2023 that it would shorten its settlement cycle to T+1, with go-live on 28 May 2024. Canada, Mexico, and Argentina moved in step, creating a synchronised cutover weekend with a double-settlement day.
鈥淭he ambitious US timeframe 鈥� just 15 months from when the rules were announced to go-live 鈥� required intense preparatory work from all market participants,鈥� says Emmanuelle Riess, global custody product manager at BNP Paribas' 网爆吃瓜 Services. 鈥淲e opened 24/7 internal and external connectivity channels to manage any critical issues, and our follow-the-sun model between the US and Lisbon was key to supporting global clients.鈥�
That preparation was tested when the Depository Trust & Clearing Corporation (DTCC) experienced a processing issue during its night cycle on 28 May, the first day of T+1. The problem was quickly fixed and had minimal market impact, but it served as a reminder of the risks in a compressed settlement window.
Firms such as BNP Paribas leaned on dual-office operations between the US and Lisbon to provide continuity and client communication during the disruption 鈥� a model that underlined the importance of resilience and redundancy in the new regime.
The results since have been encouraging. BNP Paribas says affirmation rates jumped to 95 per cent by the end of May, up from 73 per cent in January. Settlement fails edged lower, and the National 网爆吃瓜 Clearing Corporation (NSCC) clearing fund fell by 23 per cent, freeing up US$3 billion in liquidity.
But Europe is taking a more cautious approach. Back in September 2022, AFME warned that 鈥渁 move to T+1 could be the most challenging migration yet because it would remove the only business day between trading and settlement, creating significant pressure on post-trade operations, particularly for global participants".
AFME called for an industry taskforce to assess the risks, citing the cut in post-trade time, the chance of more settlement fails under the Central 网爆吃瓜 Depositories Regulation (CSDR), and greater risk in FX and securities lending.
That recommendation led to the creation of the UK Accelerated Settlement Taskforce, chaired by Andrew Douglas, which has since confirmed an 11 October 2027 target date.
Douglas says: 鈥淎utomation of trade allocations and confirmations, particularly ensuring that instructions are complete, correctly formatted, and sent promptly to CREST, is essential for mitigating risk and meeting the demands of a shortened cycle.鈥�
The Financial Conduct Authority (FCA) also encourages urgency. 鈥淭+1 will make our markets more efficient, improve liquidity, and support the growth and competitiveness of the UK,鈥� says Mark Francis, interim director of wholesale markets sell-side at the FCA.
No time for turbulence
For firms under T+1, the biggest change is the loss of breathing space. What once took a full day now has to be done in just a few hours, with teams juggling multiple cut-off times in different markets.
鈥淪horter settlement cycles rely on highly efficient post trade matching, clearing, [and] settlement processing in which the trade itself and any trade-related FX are completed hand-in-glove, as close in timestamp as possible,鈥� adds Walsh from Northern Trust Asset Servicing.
鈥淭o meet T+1 requirements, internal books and records must align with the market on a T+0 basis,鈥� notes Steve Walsh, director, product and solutions at Duco. 鈥淔irms need to operate with a T+0 mindset.鈥�
These pressures are already showing up in the numbers. Copper Research estimates that as many as 3 in 10 trades risk missing affirmation deadlines under T+1, and as of late 2023 only 69 per cent would have met the cut-off. The concern is not just an isolated fail, but the chain reaction it can cause 鈥� one missed trade can ripple through the system, creating multiple downstream failures.
The Taskforce has flagged the same risks. 鈥淜ey areas of concern include increased funding pressures due to compressed timelines, higher risk of settlement failures, and more acute challenges around exception handling and foreign exchange management,鈥� says Douglas.
Europe鈥檚 settlement data highlights the scale of the issue. Clearstream reported 鈧�9 trillion in settlement failures in 2023, around 7.5 per cent of its volume, while Euronext recorded 鈧�11 trillion, or 6.3 per cent. Euroclear says the majority of failures stem from a lack of securities, with delayed matching close behind. 鈥淎utomation is critical, but it only works with clean, high-quality data, so firms must improve data governance now,鈥� says Chris Elms, CEO of Euroclear UK and International.
Turning chaos into choreography
If T+1 has turned post-trade into a sprint, then exception management is where most runners stumble. Under T+2, firms had overnight to fix breaks; under T+1, they will have only a few hours.
The US cutover was costly 鈥� an estimated US$30 billion in compliance investment 鈥� and smaller firms reliant on legacy systems were hit hardest. Those who automated early cut fail rates and reported smoother transitions.
鈥淭hrowing more bodies at the problem isn鈥檛 sustainable; scalable automation is essential,鈥� says Duco鈥檚 Walsh.
鈥淭+1 should be seen not just as a challenge, but as a valuable opportunity to drive efficiency and improve operational processes across the trade lifecycle,鈥� adds Danny Green, head of international post-trade at Broadridge.
Deutsche Bank research shows that ETF settlement fails can account for up to 40 per cent of all fails, with poor data quality and static standing settlement instructions (SSIs) among the biggest causes. Tools such as Swift鈥檚 Unique Transaction Identifier (UTI) and auto-partialling are already improving efficiency, while predictive analytics are being used to spot trades most at risk of failing.
The International Capital Market Association's (ICMA's) European Repo and Collateral Council points to further improvements, such as splitting large trades into smaller ones, expanding auto-borrowing, and wider use of shaping. Euroclear estimates shaping alone could boost efficiency by five per cent and cut liquidity needs by three per cent.
Northern Trust highlights the role of global custodians. 鈥淲e would encourage [investment managers] to create an orchestrated ecosystem of global support for trading, making the best of solutions providers like ourselves, who can deploy global scale and operational capacity to assist investment managers with revised settlement cycle regimes,鈥� says Walsh.
As Deutsche Bank concludes, the immediate priority is ensuring that all parties can see the same data in real time, so they can spot where problems lie before they cascade through the system.
Eyes on the UK
The UK鈥檚 first T+1 trading day is set for 11 October 2027, aligned with the EU and Switzerland. The Taskforce鈥檚 UK T+1 Code of Conduct sets out 12 critical actions for firms, including allocations and confirmations by 23:59 on trade date, settlement instructions into CREST by 05:59 on T+1, standardisation of SSIs, and automation of stock lending recalls.
By June 2026, a market-wide playbook will be published, leading into full testing before the 2027 cutover weekend. Euroclear has already extended CREST operating hours, with further upgrades due in 2025鈥�26. From October 2027, stricter matching discipline will apply, with daily fines for late matching.
Douglas says: 鈥淲ith the industry Implementation Plan now published, firms now need to begin their T+1 preparations as soon as possible in 2025, so that they can be fully prepared for our industry deadlines in 2026 and 2027.鈥�
Francis at the FCA adds: 鈥淵ou may think October 2027 is a long way from now, but for some firms there is much to be done and no firm should delay.鈥�
Industry surveys confirm the concern. According to ValueExchange research, sponsored by Euroclear, DTCC and the UK Accelerated Settlement Taskforce, 62 per cent of firms are already preparing, but 26 per cent risk missing the December 2026 deadline for same-day allocations and confirmations. A further 35 per cent say they are unclear on what T+1 means in practice, particularly around funding and valuations.
Elms at Euroclear says: 鈥淭here is strong industry engagement, but with 26 per cent already at risk of missing the 2026 deadline, the need for decisive action is pressing. Now is the time for market participants to move from planning into delivery mode.鈥�
Val Wotton, managing director, general manager of institutional trade processing at DTCC, adds: 鈥淔or firms that are currently anticipating they may miss the 31 December 2026 deadline, we highly recommend they accelerate their preparations and act now to begin impact assessments, counterparty analysis, and process optimisation initiatives.鈥�
Getting to the gate
For all the technicalities, the message is simple: under T+1, there is no margin for delay. The industry has just two years to ensure that when the boarding call comes in October 2027, UK markets are ready to make their connection.
鈥淲e are dedicated to collaborating with all stakeholders for a synchronised UK transition, harmonised with the EU and Switzerland,鈥� says Elms.
In the world of T+1, every affirmation, every funding instruction, every SSI update is a passenger with a valid ticket. Miss one, and the whole journey risks disruption.
Collaboration, automation, and preparation will decide whether the industry makes its connection smoothly 鈥� or is left stranded at the gate.
That is what post-trade operations feel like under T+1 settlement. The journey from trade execution to final settlement has not changed in distance, but the layover has been cut from two days to one.
According to the Association for Financial Markets in Europe (AFME), that means an 83 per cent cut in the time available 鈥� instead of around 12 operational hours to complete critical steps, firms now have just two.
This shorter window touches every part of the post-trade process. Cash forecasting and liquidity management can no longer be handled at the end of the day, but need to happen close to real time so that funding decisions are made before trading closes.
Trade capture has to be accurate straight away, leaving little room to fix mistakes. Foreign exchange transactions, especially for non-US investors, need to be executed almost immediately if dollars are to be ready for settlement the following day. Even reconciliations, which once took place the next morning, now need to move into the same day, supported by better data and automation.
鈥淥ps teams particularly have had to think 鈥榳hat鈥檚 the time in New York鈥� with clarity and precision to get all the tasks done in time,鈥� says Gerard Walsh, global head of market solutions, banking and markets, Northern Trust Asset Servicing.
Same route, less time
The US 网爆吃瓜 and Exchange Commission (SEC) confirmed in February 2023 that it would shorten its settlement cycle to T+1, with go-live on 28 May 2024. Canada, Mexico, and Argentina moved in step, creating a synchronised cutover weekend with a double-settlement day.
鈥淭he ambitious US timeframe 鈥� just 15 months from when the rules were announced to go-live 鈥� required intense preparatory work from all market participants,鈥� says Emmanuelle Riess, global custody product manager at BNP Paribas' 网爆吃瓜 Services. 鈥淲e opened 24/7 internal and external connectivity channels to manage any critical issues, and our follow-the-sun model between the US and Lisbon was key to supporting global clients.鈥�
That preparation was tested when the Depository Trust & Clearing Corporation (DTCC) experienced a processing issue during its night cycle on 28 May, the first day of T+1. The problem was quickly fixed and had minimal market impact, but it served as a reminder of the risks in a compressed settlement window.
Firms such as BNP Paribas leaned on dual-office operations between the US and Lisbon to provide continuity and client communication during the disruption 鈥� a model that underlined the importance of resilience and redundancy in the new regime.
The results since have been encouraging. BNP Paribas says affirmation rates jumped to 95 per cent by the end of May, up from 73 per cent in January. Settlement fails edged lower, and the National 网爆吃瓜 Clearing Corporation (NSCC) clearing fund fell by 23 per cent, freeing up US$3 billion in liquidity.
But Europe is taking a more cautious approach. Back in September 2022, AFME warned that 鈥渁 move to T+1 could be the most challenging migration yet because it would remove the only business day between trading and settlement, creating significant pressure on post-trade operations, particularly for global participants".
AFME called for an industry taskforce to assess the risks, citing the cut in post-trade time, the chance of more settlement fails under the Central 网爆吃瓜 Depositories Regulation (CSDR), and greater risk in FX and securities lending.
That recommendation led to the creation of the UK Accelerated Settlement Taskforce, chaired by Andrew Douglas, which has since confirmed an 11 October 2027 target date.
Douglas says: 鈥淎utomation of trade allocations and confirmations, particularly ensuring that instructions are complete, correctly formatted, and sent promptly to CREST, is essential for mitigating risk and meeting the demands of a shortened cycle.鈥�
The Financial Conduct Authority (FCA) also encourages urgency. 鈥淭+1 will make our markets more efficient, improve liquidity, and support the growth and competitiveness of the UK,鈥� says Mark Francis, interim director of wholesale markets sell-side at the FCA.
No time for turbulence
For firms under T+1, the biggest change is the loss of breathing space. What once took a full day now has to be done in just a few hours, with teams juggling multiple cut-off times in different markets.
鈥淪horter settlement cycles rely on highly efficient post trade matching, clearing, [and] settlement processing in which the trade itself and any trade-related FX are completed hand-in-glove, as close in timestamp as possible,鈥� adds Walsh from Northern Trust Asset Servicing.
鈥淭o meet T+1 requirements, internal books and records must align with the market on a T+0 basis,鈥� notes Steve Walsh, director, product and solutions at Duco. 鈥淔irms need to operate with a T+0 mindset.鈥�
These pressures are already showing up in the numbers. Copper Research estimates that as many as 3 in 10 trades risk missing affirmation deadlines under T+1, and as of late 2023 only 69 per cent would have met the cut-off. The concern is not just an isolated fail, but the chain reaction it can cause 鈥� one missed trade can ripple through the system, creating multiple downstream failures.
The Taskforce has flagged the same risks. 鈥淜ey areas of concern include increased funding pressures due to compressed timelines, higher risk of settlement failures, and more acute challenges around exception handling and foreign exchange management,鈥� says Douglas.
Europe鈥檚 settlement data highlights the scale of the issue. Clearstream reported 鈧�9 trillion in settlement failures in 2023, around 7.5 per cent of its volume, while Euronext recorded 鈧�11 trillion, or 6.3 per cent. Euroclear says the majority of failures stem from a lack of securities, with delayed matching close behind. 鈥淎utomation is critical, but it only works with clean, high-quality data, so firms must improve data governance now,鈥� says Chris Elms, CEO of Euroclear UK and International.
Turning chaos into choreography
If T+1 has turned post-trade into a sprint, then exception management is where most runners stumble. Under T+2, firms had overnight to fix breaks; under T+1, they will have only a few hours.
The US cutover was costly 鈥� an estimated US$30 billion in compliance investment 鈥� and smaller firms reliant on legacy systems were hit hardest. Those who automated early cut fail rates and reported smoother transitions.
鈥淭hrowing more bodies at the problem isn鈥檛 sustainable; scalable automation is essential,鈥� says Duco鈥檚 Walsh.
鈥淭+1 should be seen not just as a challenge, but as a valuable opportunity to drive efficiency and improve operational processes across the trade lifecycle,鈥� adds Danny Green, head of international post-trade at Broadridge.
Deutsche Bank research shows that ETF settlement fails can account for up to 40 per cent of all fails, with poor data quality and static standing settlement instructions (SSIs) among the biggest causes. Tools such as Swift鈥檚 Unique Transaction Identifier (UTI) and auto-partialling are already improving efficiency, while predictive analytics are being used to spot trades most at risk of failing.
The International Capital Market Association's (ICMA's) European Repo and Collateral Council points to further improvements, such as splitting large trades into smaller ones, expanding auto-borrowing, and wider use of shaping. Euroclear estimates shaping alone could boost efficiency by five per cent and cut liquidity needs by three per cent.
Northern Trust highlights the role of global custodians. 鈥淲e would encourage [investment managers] to create an orchestrated ecosystem of global support for trading, making the best of solutions providers like ourselves, who can deploy global scale and operational capacity to assist investment managers with revised settlement cycle regimes,鈥� says Walsh.
As Deutsche Bank concludes, the immediate priority is ensuring that all parties can see the same data in real time, so they can spot where problems lie before they cascade through the system.
Eyes on the UK
The UK鈥檚 first T+1 trading day is set for 11 October 2027, aligned with the EU and Switzerland. The Taskforce鈥檚 UK T+1 Code of Conduct sets out 12 critical actions for firms, including allocations and confirmations by 23:59 on trade date, settlement instructions into CREST by 05:59 on T+1, standardisation of SSIs, and automation of stock lending recalls.
By June 2026, a market-wide playbook will be published, leading into full testing before the 2027 cutover weekend. Euroclear has already extended CREST operating hours, with further upgrades due in 2025鈥�26. From October 2027, stricter matching discipline will apply, with daily fines for late matching.
Douglas says: 鈥淲ith the industry Implementation Plan now published, firms now need to begin their T+1 preparations as soon as possible in 2025, so that they can be fully prepared for our industry deadlines in 2026 and 2027.鈥�
Francis at the FCA adds: 鈥淵ou may think October 2027 is a long way from now, but for some firms there is much to be done and no firm should delay.鈥�
Industry surveys confirm the concern. According to ValueExchange research, sponsored by Euroclear, DTCC and the UK Accelerated Settlement Taskforce, 62 per cent of firms are already preparing, but 26 per cent risk missing the December 2026 deadline for same-day allocations and confirmations. A further 35 per cent say they are unclear on what T+1 means in practice, particularly around funding and valuations.
Elms at Euroclear says: 鈥淭here is strong industry engagement, but with 26 per cent already at risk of missing the 2026 deadline, the need for decisive action is pressing. Now is the time for market participants to move from planning into delivery mode.鈥�
Val Wotton, managing director, general manager of institutional trade processing at DTCC, adds: 鈥淔or firms that are currently anticipating they may miss the 31 December 2026 deadline, we highly recommend they accelerate their preparations and act now to begin impact assessments, counterparty analysis, and process optimisation initiatives.鈥�
Getting to the gate
For all the technicalities, the message is simple: under T+1, there is no margin for delay. The industry has just two years to ensure that when the boarding call comes in October 2027, UK markets are ready to make their connection.
鈥淲e are dedicated to collaborating with all stakeholders for a synchronised UK transition, harmonised with the EU and Switzerland,鈥� says Elms.
In the world of T+1, every affirmation, every funding instruction, every SSI update is a passenger with a valid ticket. Miss one, and the whole journey risks disruption.
Collaboration, automation, and preparation will decide whether the industry makes its connection smoothly 鈥� or is left stranded at the gate.
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