Euroclear deal sees T+2 hit UK and Ireland next October

The UK and Ireland are to cut their standard settlement cycle to T+2 in October next year as part of a deal between Euroclear and exchanges operating in the two countries.

The UK and Ireland are to cut their standard settlement cycle to T+2 in October next year as part of a deal between Euroclear and exchanges operating in the two countries.

Rules in the EU central securities depositories regulation will mandate the introduction of a standard two-day settlement cycle, T+2, across Europe in 2015, with 1 January that year seen as the likely deadline for implementation.

The early move in the UK and Ireland is the result of cooperation between the London Stock Exchange, BATS Chi-X Europe, Turquoise and the Irish Stock Exchange.

Currently transactions in both countries settle on a T+3 basis but will transition on 6 October 2014, meaning cash and securities will be exchanged two days after a trade. OTC transactions will be exempted.

Euroclear UK and Ireland CEO, John Trundle, said: “Euroclear UK & Ireland is working collaboratively with industry practicioners to address and mitigate risks associated with the move to a shorter settlement cycle in order to ensure a very smooth and coordinated transition.”

The exchanges said they are embracing the move to T+2 and welcome initiatives to reduce risk and cut costs for market participants.

Both UK regulators, the Financial Conduct Authority and the Bank of England, are supporting the early move to T+2.

Currently, Euroclear UK and Ireland offers trade settlement on a T+0 basis, where parties can settle in real time if both agree to the settlement period.

Transactions that settle in Euroclear’s Belgian, French and Netherlands subsidiaries will also be settled on a T+2 basis from 6 October next year.

«