As Europe counts down to its October 2027 deadline for T+1 settlement, industry leaders gathered at SIBOS 2025 in Frankfurt to take stock of what the world has learned from regions that have already made the leap, particularly the U.S., which transitioned in May 2024.
The session, T+1 and Beyond: Building the Future of Global Markets, brought together experts to explore a critical question: Has T+1 lived up to its promise of reduced risk and improved liquidity? And perhaps more importantly, what lessons can help ensure Europe's transition is smooth? Finally what the future looks like moving beyond T+1.
Learn more about global accelerated settlement efforts
A Surge of Global Interest
For Michalis Sotiropoulos, DTCC Head of Government Relations, EMEA, the answer begins with the remarkable level of attention the U.S. experience has generated worldwide and with the fact that automation is key to the transition.
"We have seen a huge ramp up in interest among non-U.S.-based DTCC customers about what T+1 means for their operations," Sotiropoulos shared. The numbers tell a compelling story: by 2030, an estimated 70% of global markets are expected to settle on a T+1 basis. "From what we've seen in the U.S., it's really important to prepare and get it right."
He stressed that in Europe first and foremost the journey to T+1 that is genuine opportunity to consolidate post trade workflows, increasing settlement efficiencies and unlocking additional opportunities to unlock netting and clearing for institutional client flow.
Looking at the U.S. experience, the benefits are indeed tangible. Within the first few months after launching the value of funds held in the NSCC's clearing fund fell more than 28% from $12.8 billion to $9.2 billion. That's $3.6 billion freed up for more productive uses. Meanwhile, trade fail rates have dropped 7% for U.S.-based trades, and settlement times have accelerated dramatically, with roughly 80% of trades now settling by T+1 in 2025, up from just 6% in 2023.
The Cross-Border Challenge
Yet challenges remain. While domestic U.S. trades have adapted smoothly, cross-border transactions continue to face hurdles. Trade fails from Asia-Pacific into the U.S. have climbed 9%, and those from the EU have risen 5%. The culprit? A possible combination of time zone differences and foreign exchange complications.
Related: Cracking the European T+1 Code for APAC Firms
Industry experts discussed how misalignment is particularly acute when it comes to currency conversion. U.S. securities now settle on T+1, but foreign exchange transactions remain on T+2 creating a timing gap for international traders who need to convert currency into U.S. dollars. Add to that, issues with insufficient inventory, cash shortages and instruction errors and the challenge becomes clear.
Europe's Unique Complexity
Jane Masen, Head of Custody with HSBC, underscored why Europe can't simply copy and paste the U.S. approach. "We can't be complacent. T+1 was a really big deal in the U.S. In Europe, we're looking at 27 different markets, each with its own regulatory regime and other unique characteristics."
For Sotiropoulos, this complexity reinforces the need for early preparation, particularly among smaller firms that may lack the resources of their larger counterparts. "Technology and the associated cost can be an impediment," he acknowledged. "That's why DTCC is launching a suite of tools aimed specifically at smaller firms, which we hope to have available by the end of 2025."
DTCC's Institutional Trade Processing (ITP) makes it easy for its European customers in multiple ways. Sotiropoulos focused on two concrete examples of services which will be available by the end of the year:
- ITP will soon launch a package that supports automation for small firms: “cost and technology constraints are no longer barriers to automation’’ and therefore "no longer an excuse to stay behind."
- BNP Paribas and J.P. Morgan have recently joined CTM’s automated tri-party matching workflow for prime brokers, which streamlines trade communications between Hedge Funds, Prime Brokers & Executing Brokers.
Getting the Basics Right
When session moderator Andrew Douglas, Chair of the UK Accelerated Settlement Taskforce, pointed to the 1 billion euros in late settlement fines paid by EU market participants, he posed a pointed question: Why, after years of automation efforts, do some firms still struggle with the basics?
Sotiropoulos was candid in his response. "It is a challenge. T+1 is not only about automation, but also about the entire process." He pointed to incorrect standard settlement instructions (SSIs) data as one of the biggest ongoing problems, an issue DTCC has been working to address with clients for years. "Firms will now have the regulatory mandate as a driver to prioritize certain operational areas like SSIs to address specific problems."
Related: Navigating T+1 in Europe: Comparing UK & EU Roadmaps
An Opportunity to Reimagine
Despite the challenges, Sotiropoulos emphasized that the industry response has been overwhelmingly positive. "We've seen clearly that clients view T+1 as positive," he said. "There is a lot of work to prepare for it, but it also creates an opportunity and incentive to rethink and redesign processes to be more efficient and drive out manual processes."
The industry’s shift to T+1 settlement is not just a regulatory change, but a catalyst for broader transformation and innovation. Firms are urged to prepare for even faster settlement cycles, such as T0 by investing in technology and operational agility now. Moving away from batch processing toward real-time automation can enhance efficiency, reduce risk and improve client service. Ultimately, these efforts are laying the foundation for a future where traditional and digital finance converge, enabling seamless integration and a more unified financial ecosystem. Early and strategic investment will position firms as leaders in the rapidly evolving marketplace.