Europe’s shift to T+1 is entering a critical phase, with industry testing plans placing heavy emphasis on cross-border coordination and operational resilience ahead of the transition in 2027.
The roadmap, developed jointly by the EU T+1 Industry Committee (IC), the UK Accelerated Settlement Taskforce (AST) and Switzerland’s Securities Post-Trade Council T+1 Task Force (SISSPTC), sets out a structured, multi-phase approach designed to simulate real market conditions and identify friction points across the post-trade ecosystem.
The plan outlines a sequence beginning with internal testing and bilateral testing between counterparties, before progressing to industry-wide testing cycles. These will build up to full-scale “dress rehearsals”, often scheduled over weekends, to replicate compressed settlement timelines without disrupting live markets.
A key theme running through the framework is the complexity of coordinating multiple market infrastructures. Central securities depositories (CSDs), central counterparties (CCPs), the industry bodies state that trading venues need to align processes spanning trade affirmation, allocation, funding and settlement within significantly tighter deadlines.
The document highlights that testing will not be limited to domestic flows, and instead, cross-border transactions, widely viewed as the most operationally challenging, are expected to be a central focus, particularly where differing market cut-offs, time zones and FX processes overlap.
FX is flagged as a key pressure point, with market participants required to ensure that currency funding can be executed within the shortened settlement cycle. This is compounded by dependencies on third-party providers and the need for pre-funding models in certain scenarios.
Also, securities lending and borrowing activity features prominently in the testing scope, given its role in supporting settlement efficiency. Firms are expected to validate that recall processes and inventory management can function effectively under T+1 constraints.
Another area of attention is settlement discipline. The plan highlights the importance of monitoring fail rates throughout testing phases, with an implicit recognition that compressed timelines could amplify settlement risk if processes are not fully optimised.
Crucially, the roadmap stresses industry-wide participation. Market readiness is framed as a collective outcome, dependent not only on individual firm preparedness but also on the weakest links across the transaction chain.
Therefore, governance and coordination mechanisms are being positioned as central to the testing effort, with regular checkpoints, feedback loops and issue resolution processes built into the timeline.