Our T+1 journey starts now

T+1 settlement: improving market efficiency

We are fully supportive of the UK moving to a T+1 settlement cycle for securities trades. Our letter to the Prime Minister on supporting growth highlighted that 'accelerating adoption of securities settlement in 1 day (T+1) ... will make markets more efficient'. We also see other benefits arising from T+1, including improved liquidity, better use of capital and the reduction of risks for market participants.

The move to T+1 is aligned with our strategic objective to ensure markets function well. It also supports our strategy and wider commitment to strengthen the UK’s position in global wholesale markets while supporting growth and innovation.  

Throughout the event today, we have also heard the strong case set out by others for T+1.

Welcoming the Accelerated Settlements Taskforce’s final report

We welcome publication of the Accelerated Settlements Taskforce’s (AST) final report.

I want to commend members of the group for the strong progress they have made in setting out a detailed implementation plan for the UK to move to a T+1 settlement cycle by 11 October 2027. We are grateful to all of you for your work, for the opportunity to act as observers on the group and to Andrew for his strong leadership.  

I have noticed that the cover of the report is a fetching colour of go-faster green, which is most appropriate for looking forward to the next stage of the work!

Looking forward – what should firms do next? 

Looking forward, firms must now turn their attention to implementing the new T+1 requirement.  

Our role will be to support firms as they transition. All firms that participate in wholesale markets are likely to be impacted in some way, from banks, to asset managers, to platforms and corporates. However, the operational changes and challenges faced will likely differ from firm to firm depending on, among other factors, their business models, the settlement systems they currently utilise and the capacity for those systems to be upgraded.  

If there is only one message I would like you all to take away today is that you should start thinking now and put a plan in place as soon as possible to move to T+1 by the deadline.

You may think October 2027 is a long way from now, but for some firms there is much to be done and no firm should delay. I want to be clear today on our expectations for firms and what they should be doing to meet the new T+1 requirement in time for October 2027.  

Consider 4 key areas in this context.

1. Read the AST report

The move to T+1 is a market-led initiative. The AST report sets out a roadmap of technical and operational recommendations that firms should implement, along with specified timings. It also sets out expected behaviours for firms. Firms should read carefully the contents of the AST’s report now and identify how best they can be implemented for their firm.  

2. Plan early

Firms must plan and prepare early for the move to T+1. This notion is aligned with the Code of Conduct’s expected behaviour to 'action this day'. 

Firms should not wait until 2027 to put in place relevant changes. Firms must start planning and putting plans into action from now.  

Firms should determine what changes are required and how they will need to implement them, while seeking to avoid any unnecessary costs or complexity. Consideration should also be given to any changes to areas related to securities settlement, such as securities financing and foreign exchange markets.  

One of the key recommendations in the report centres on the operational processes that need to take place to ensure faster settlement, including trade allocations and confirmations as well as the submission of settlement instructions to the Central Securities Depository. We encourage firms to consider their own processes and what may need to change to facilitate accelerated settlement.

We also encourage firms to consider taking advantage of appropriate innovations in automation which may bring greater efficiency through increased settlement speed and accuracy. Automation may increase a firm's processing capability, thereby increasing their resilience for dealing with extra volumes and increased risks at times of market stress.  

3. Budget to execute the plan

Firms should consider any budgeting or resourcing needs for executing the plans they make. For example, plans to make changes to processes or operational systems may need special budgets or additional resources. The AST report contemplates that budgeting activity would happen this year, 2025.  

4. Act to implement and test the changes

We expect firms to take timely action to put their plans into effect and to maintain momentum for the changes needed throughout the transition period. In considering the timeliness for action, regard must be given to testing. The changes required for T+1, such as the adoption of new or updated operating systems, need to be made in time to allow for testing both internally and with external parties.

Firms will need to engage early and regularly with all parties that are involved with their settlement processes. This includes all relevant internal stakeholders such as the front, middle and back office, legal and compliance, as well as their counterparties and any third-party service providers. Regular engagement and a clear understanding of roles and responsibilities will help to ensure a smoother ride to implementation.

In addition, we encourage firms to engage with the AST to raise any questions, to flag any difficulties and to make suggestions on what the group may do to make implementation happen more smoothly. Also, they could consider, as appropriate, whether to engage with trade associations or other market groups.

The AST report observes that the sooner firms implement the steps they need to take to move to T+1, the sooner they can capitalise on the benefits. 

Our approach to support T+1

And I want to turn your attention now to what our approach will be as we support the industry move to T+1. Alongside the Treasury and the Bank of England we will continue our role as observers on the group. This will give us the opportunity to understand how firms are progressing through the transition.  

Even though the move to T+1 by October 2027 is industry-led, we will use aspects of our existing supervisory approach to support industry. We consider this in 3 core areas: engagement with firms, comms and market monitoring.  

Engaging with firms

We will engage with firms on their T+1 plans as a part of our ongoing supervision. We may engage bilaterally or, where appropriate, in a wider forum, such as with trade associations. In discussing their plans, we would expect firms to cover how they are meeting our expectations on preparedness and how their activities are aligned, or not, with the recommendations as set out in the UK T+1 Code of Conduct. We expect firms to be open with us about their plans and any barriers they may face.

We also plan to have engagement beyond our supervised firms with other market participants also impacted by the transition, including corporates and other non-financial counterparties.

Our communication strategy

We will use an active communications strategy throughout the transition period. Alongside the press statement released earlier this week, we launched a new T+1 webpage on our FCA website. This page will be updated regularly and used as a ‘one-stop shop’, to promote T+1 awareness and to send other messages, for example, on our expectations for firms. We will also consider the use of other existing communication tools – including speeches – where appropriate to promote the transition. So, keep an eye out for all of those!  

Monitoring the market

Furthermore, with the data and other evidence available to us, we will monitor the market during and after the transition period to help us gauge firm progress on the move to T+1 and identify any issues that need to be addressed.  

We look forward to an orderly, timely transition to the new market standard of T+1 led by the market itself. However, where we see actions or inaction that would harm market integrity through this process, we will consider whether we need to intervene further.

International coordination

Securities markets are inherently global and cross-border. We therefore recognise the importance of ongoing international coordination. We believe such coordination should maximise the probability of an orderly transition, while minimising the frictions and costs of misalignment.

With this in mind, we recognise the government’s engagement with other European jurisdictions to support an aligned move to T+1 across Europe and the growing convergence around 11 October 2027 as the date for the move. We agree with the government that alignment would be highly desirable, and comparable views have been expressed to us by market participants.

Further, the benefits of international coordination extend to engagement between international regulators, and between industry groups in different countries, on experiences and plans with regards to the T+1 transition. For example, we support the feedback that we should learn lessons from the US transition and are grateful to the many firms involved that have already shared their experiences. 

Key takeaways

Our aim is for all market participants to move to a T+1 settlement cycle efficiently and successfully by 11 October 2027 with limited market disruption.

The clear message to take away today, as we embark on this next phase of the UK’s move to T+1, is that we expect firms to be prepared for the move to T+1. Remember the 4 key areas I have just highlighted:

1. Read carefully the AST report.  
2. Plan early.  
3. Budget to execute the plan.  
4. Act to implement and test the changes, on a timely basis.

We look forward to engaging with firms through the transition to T+1 and realising the benefits and efficiencies this initiative will bring to the UK market, including its role in supporting growth and innovation.