In February 2025, the UK’s Accelerated Settlement Taskforce (AST) published its long-awaited T+1 Settlement Plan, signalling the country’s intent to shift to a one-day settlement cycle by 11 October 2027. While that date may appear comfortably distant, the reality is that the path to T+1 is likely to be far more complex than the US transition that happened last year, writes Kaisha Schnoll, vice president, trade settlements at STP Investment Services.

The US market’s move to T+1 in 2024 has offered valuable insights, yet replicating the transition in the UK is not as straightforward as copying and pasting a playbook. Structural, regulatory, and operational nuances in the UK and European markets will require market participants to navigate a web of interdependencies, heightened coordination challenges, and a diverse regulatory environment.

Different rules, different pressures 

The US transition largely unfolded within a single regulatory jurisdiction. The UK, however, must plan in the context of its post-Brexit regulatory environment, navigating evolving divergence from both the EU and Switzerland. On 12 February 2025, the European Commission introduced a legislative proposal for T+1, which will now undergo negotiations within the European Council and parliament. Meanwhile, the Swiss Securities Post-Trade Council (swissSPTC) recommended a move to T+1 on 23 January 2025.  

The UK’s adoption of a T+1 settlement cycle will require amendments to its version of the Central Securities Depositories Regulation (CSDR), originally inherited from the EU. These changes must remain flexible to accommodate potential delays in neighbouring markets. Without alignment, cross-border settlement could become more fragmented, increasing friction and operational risk. 

‘Recommendation Zero’: Act now, not later 

A compelling element of the UK’s plan is ‘recommendation Zero’, a call for firms to take proactive steps ahead of formal regulatory mandates. T+1 compresses the settlement window to just 24 hours, demanding a faster, more efficient operating model. 

Waiting for final rules could put firms at a disadvantage, exposing them to higher failure rates and reputational risk. 

Timelines and instruments in scope 

While full market adoption is targeted for 31 December 2027, the AST recommends 11 October as the optimal go-live date. This timing considers index rebalancing events and UK market holidays. A T+1 playbook – expected in 2026 – will provide further operational guidance. 

The key deadlines include that trade allocation and confirmation should occur by 23:59 GMT on trade date (T+0), using an electronic industry-standard protocol. In addition, settlement instructions must be submitted no later than 05:59 GMT on T+1. 

The scope of T+1 is set to apply to equities, corporate bonds, and other securities currently settling on T+2. Gilts, which already settle on T+1, will remain unaffected. While ETFs will align with their underlying markets, derivatives and mutual funds are excluded for now. 

The plan also addresses securities lending, calling for automated recall processes and adherence to best practices under an updated Code of Conduct, highlighting the broader push toward modernisation. 

Why the UK transition will be more challenging 

Unlike the US, which benefits from centralised infrastructure, the UK must navigate a more fragmented market. Multiple custodians, sub-custodians, and cross-jurisdictional counterparties add layers of complexity. Unlike the US, which benefits from centralised infrastructure, the UK must coordinate across multiple custodians, sub-custodians, and counterparties operating in different jurisdictions. As noted by DTCC’s Matt Johnson, nearly 25% of trade failures are due to mismatches in standing settlement instructions (SSIs) or place-of-settlement mismatches. These inefficiencies will only be magnified under T+1 unless addressed early. 

Key risks to watch 

Firms should prepare to mitigate several heightened risks, including: increased trade failures, due to tighter resolution windows; misalignment with the EU’s CSDR, potentially leading to penalties and inefficiencies, and dually listed securities, which require careful coordination across settlement venues. 

When it comes to what firms should be doing now to prepare effectively, firms should focus on automating workflows wherever possible- manual processes won’t withstand T+1 timelines. In addition, firms need to evaluate dually listed securities to ensure centralised settlement, as well as enhance cross-border coordination. 

This is especially important across time zones and legal jurisdictions. Security holdings should be evaluated carefully, particularly dually listed securities, to ensure they are centralised in a single settlement depot for alignment and efficiency. 

Lessons from the US: communicate, collaborate, automate 

The US experience reinforced that success in T+1 hinges on three pillars: communication, collaboration, and automation. 

Firms that engage early with custodians, brokers, and vendors can identify bottlenecks and mitigate risks before they become systemic. Industry-wide coordination will be just as vital in the UK. 

Perhaps most critically, manual processes won’t cut it in a T+1 world. From allocation and affirmation to settlement instruction matching, infrastructure must be seamless, resilient, and interoperable. 

Looking ahead 

The UK’s shift to T+1 is more than a regulatory mandate adjustment – it’s a strategic opportunity to future-proof operations. While October 2027 may seem distant, the underlying changes required are complex and time-intensive. Firms that move early – by embracing automation, reviewing outsourcing opportunities, and aligning cross-border processes – will be better positioned to reduce risk and gain efficiency. 

The road ahead won’t be easy, but for those prepared to lead, it offers significant rewards in a market where speed, coordination, and resilience are increasingly critical.