On the surface, the latest T+1 Market Readiness Survey is reassuring, with results showing that 83% of firms are now actively engaged in T+1 preparations and 14% consider themselves already compliant with the requirements that will take effect in October 2027. The number of firms still sitting in early preparation stages has also fallen by roughly half since the third quarter of last year. By most measures, the market is moving in the right direction and accelerating its preparation. 

However, the industry’s progress is not homogeneous, and fund managers are lagging well behind the custodians, brokers and infrastructure providers that form the rest of the industry. With 57% of buy-side firms yet to start the development work needed to operate in a T+1 environment, there is a lot of work to do, and we are close to running out of time. 

A lagging buy-side widens the risk for everyone 

T+1 will only be a success if every part of the settlement chain is properly prepared. A custodian or broker that has rebuilt its processes for next-day settlement still depends on the fund manager on the other side of the trade to deliver instructions, funding and FX cover in time. When one part of that chain is unprepared, the risk spreads across the ecosystem through failed settlements. The entire process is also further delayed when firms have to handle instruction exceptions manually and keep capital tied up, when it could be put to work elsewhere.  

This is why the gap between the wider market’s progress and buy-side readiness matters. 90% of firms are expected to have scoped and funded their T+1 work by the end of this year. If the majority of fund managers are still outside that group, they become the weak link the rest of the market has to plan around, through wider buffers, more manual checks and, in the worst cases, settlement fails that draw regulatory attention, result in penalties and damage client relationships. 

With only 43% of the buy-side already having started work on T+1 preparations, we must ask ourselves why. 

In many cases, these firms are falling behind because before they can plan and execute their own transition, they need details of processes and deadlines from their service providers. 

But at this late stage in the preparation for transition, waiting passively for this information is not enough. Buy-side firms need to proactively communicate with their service providers, encouraging them to provide key operational details as soon as possible. If you haven’t already done it, setting up regular meetings will make communication more clear-cut, help to set and manage expectations and ensure that service providers know what you need from them.  

Every participant in the chain of events that culminates in settlement needs to be talking to each other regularly about their preparations to ensure that everyone is ready for T+1 come October 2027. 

Automation can unlock T+1 readiness 

Funding and FX have emerged as the two most persistent challenges for buy-side firms in their T+1 preparations. Shortening the settlement cycle compresses the window in which a fund manager needs to confirm trades, source funding and execute on the FX needed to settle cross-border transactions. For funds trading across time zones, that window can shrink to almost nothing once cut-off times and currency liquidity are taken into account.  

Amid these shrinking timelines, automating processes will be essential to ensuring that fund managers can meet next-day settlement requirements. Just over half of firms surveyed have already automated their settlement instruction processing, removing the manual steps to ensure that they can process their transactions quickly and accurately. Some are going further still, with a small but growing number planning to change their dealing cycles in the UK specifically because of T+1, rebuilding workflows around the new timeline. 

Automation will not solve the funding and FX challenge on its own, but it buys back the time that manual processing eats up. For buy-side firms still relying on spreadsheets, phone calls and end-of-day batch processing, automation will be the crucial difference between meeting deadlines and missing them. 

Raising industry standards 

Firms must treat the next 18 months as a real opportunity to rebuild their settlement process rather than just a compliance tick box. 

Ultimately, T+1 is a stepping stone on a journey to, maybe, T0 but definitely to digitalisation. Firms that prepare well now by getting their data in order to utilise automated processes will future-proof themselves against such changes. 

This will pay off in more ways than one. Custodians, brokers and counterparties are already starting to factor settlement reliability into how they price relationships and allocate resources. Firms with a track record of clean, timely settlement will become easier and more cost-effective to partner with, helping them to scale their businesses and improve their reputations. Firms that don’t meet the deadline will find the opposite and could see financial and reputational consequences for persistent failed settlements. 

The market will move to T+1 on 11 October 2027. Make sure you are able to move with it.