The UK Accelerated Settlement Taskforce (AST) has published its final T+1 implementation plan marking a critical step towards a faster and more efficient securities settlement process. This move aligns the UK with a global trend toward faster settlement times aiming to reduce counterparty risk, enhance market efficiency and improve liquidity. 

At her February 19 meeting with the investment banking and asset management sectors to refine the Government’s Financial Services Growth and Competitiveness Strategy, Chancellor of the Exchequer Rachel Reeves reaffirmed the importance of going further and faster to drive growth and revealed that the Government had accepted all recommendations made by the Accelerated Settlement Technical Group.1 “Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive,” she said. 

At the same meeting, FCA CEO Nikhil Rathi confirmed that the regulator “expects firms to engage and plan early”.  Andrew Bailey, Governor of the Bank of England, added: “It is important that firms and settlement infrastructures have robust plans for an orderly transition in October 2027. As part of this effort, the Bank looks forward to continuing dialogue with regulators in other markets which are pursuing similar changes.”¹

The AST’s implementation plan includes a Code of Conduct that highlights 12 critical operational actions and 26 recommended actions to ensure a smooth transition. The AST also advises that all major changes should be completed by the close of 2026 to facilitate this transition. 

While firms know this change is coming, many are not entirely clear about what they should be doing now. Below we look to address these questions in a sensible and pragmatic way.  

Mark Your Calendar

October 11, 2027 is the day UK cash securities trading will officially move to T+1, but – per the AST’s advice – firms should be fully tested and ready well before this date. 

To increase settlement rates, firms may require significant operational and technological upgrades, particularly in respect of trade matching, reconciliations, and post trade automation.  With tighter timeframes to manage exceptions, market participants, including investment banks, asset managers and custodians must invest in minimising time-consuming manual exception processes to avoid settlement failures.   

Additionally, the compressed settlement window may increase funding and liquidity pressures, particularly for international investors who rely on foreign exchange , which have historically worked to T+2 cycles, and securities lending recall  processes that will now need to operate to shorter timelines.

Andrew Douglas, chair of the AST, has urged market participants to start planning now, mobilising their initiatives and secure appropriate budget allocations for project funding through 2026. He has emphasised that “automation will be a key component of a successful implementation” helping firms manage the accelerated timeline effectively.² 

The plan provides more detail on the required automation, particularly in respect of the AST’s five ‘expected behaviours'  –  commitment to compliance, automation, ‘action this day’, settlement discipline and readiness for testing – which should be helpful to the industry in planning and driving readiness efforts.

We would note the following highlights from the AST plan:

• The encouragement to compliance and internal audit functions, as well as by extension regulators, that they reference the Code of Conduct when assessing performance – line teams need to be ready to explain how they are aligning to the Code.
  
• The reiteration that the industry needs to be ready for market testing by the start of 2027 – so all major changes should be complete and in place by the end of 2026.
  
• The specific call out for automation of Standard Settlement Instruction (SSI) processing, corporate action processing, and stock lending recalls – these all are actionable priorities that the industry should take seriously and engage with now.

To address these priorities, participants should look to build and/or utilize stock ladders real-time to ensure inventory is in the correct place or has been recalled from loan to enable timely settlement. They should ensure they continuously improve their settlement performance through correctly identifying fail reasons and working on fixes for repeated pre-matching or settlement issues. 

The securities post trade space is a focus for a number of interesting and potentially useful technology and operational service vendors, and innovative market infrastructure initiatives: as it can take time to onboard these and incorporate them into operational processes, firms should assess these options during 2025 to determine whether any might be a useful part of their approach.

And finally, to get benefit from these investments, over and above alignment with the new market standard, firms should ensure that the data lens through which they assess settlement performance is not confined to settlement performance in terms of numbers of trades but also takes in transaction value and risk.

So, while there is sufficient time to plan and execute a high-quality T+1 initiative for the UK and Europe, aligning to the market convention and realizing benefits, there is no time to waste. 

References

¹ https://www.gov.uk/government/news/chancellor-goes-further-and-faster-to-drive-growth-by-speeding-up-securities-trades
² https://acceleratedsettlement.co.uk/publishes-final-implementation-plan/