Firms should use the UK’s transition to a T+1 securities settlement cycle as an opportunity to reassess how their post-trade systems are configured, applying this as a driver to improve business efficiency and to reduce risk and cost in middle and back-office processes.
Andrew Douglas, Chair of the UK Accelerated Settlements Taskforce (AST), emphasized this as a key message during the DTCC’s recent virtual event on the UK's transition to T+1 in 2027. His comments reflected the results of a recent survey designed to gauge the industry’s level of readiness for the UK’s transition to next-day settlement.
The survey, Accelerated Settlement in the UK: Q1 2025 Pulse survey Key Findings, is the first in a series of pulse surveys conducted by ValueExchange in partnership with the UK Accelerated Settlement Taskforce, DTCC and Euroclear. It draws on insights from 557 firms globally on the risks and challenges faced by firms as they prepare to meet the guidelines set out in the UK Accelerated Settlement Taskforce implementation plan.
With migration to T+1 in the UK and European Union scheduled for October 11, 2027, here are three key takeaways from the recent virtual event:
- Early Preparation Is Crucial
Firms should use the UK's transition to a T+1 securities settlement cycle as an opportunity to reassess and improve their post-trade systems. Early preparation, including reading documentation, identifying necessary changes, and securing funding, is essential to ensure a smooth transition.
“Transition to next-day settlement will not mean just losing one day from the settlement cycle,” says Douglas. “Rather, settlement counterparties will lose up to 83% of the time previously available for transaction processing and for managing any exceptions that they may encounter.”
- Challenges & Concerns
The transition to T+1 will significantly reduce the time available for transaction processing and managing exceptions. Key challenges highlighted by survey respondents include funding issues, fails management, exceptions handling, and foreign exchange.
Related: Critical Issues on the Road to T+1
“Many of the challenges will be encountered in the post-trade, pre-settlement area where the automation of allocations and confirmations will be important to ensure that correctly formatted and populated instructions are sent to CREST,” explained Charles Pugh, Programme Office Manager at Euroclear UK & Ireland (EUI).
- Importance of Automation
Automation of allocation and confirmation processes is critical to meet the new T+1 requirements. Firms need to post allocations and confirmations by 23:59 on trade date (T+0) and send settlement instructions by 05:59 on T+1. Currently, a significant percentage of trades fail to meet these deadlines, emphasizing the need for accelerated processes.
Related: Automation for the People
“Central trade matching and enrichment platforms like CTM and ALERT are essential in automating allocation and confirmation processes, greatly enhancing efficiency and accuracy,” stated Matt Johnson, DTCC Executive Director, ITP Product Management and Industry Relations. "Our 25 years of operation and established client base in Europe demonstrate the global reach and effectiveness of these solutions.”
Find out how DTCC Consulting Services is helping clients prepare for T+1.
For more insight, watch the full replay below.