T+1 Settlement: are firms ready for 2027?

Why T+1 matters and what we’ve been doing so far

The UK’s move to a T+1 securities settlement cycle on 11 October 2027 is a fundamental shift in how securities transactions are settled.

To prepare, market participants will have to rapidly speed up their post-trade processes, including automating their operations as appropriate.

We’ve found that some are more ready than others – and some have a lot to do to meet deadlines, and our expectations.

Participants should view T+1 as an opportunity. It will make the UK market more efficient and reduce risk – ultimately freeing up funds for investment.

Our work on the T+1 transition is helping support growth in the UK financial market. We’re testing how ready market participants are for the transition, and where implementation challenges and bottlenecks remain.

This forms part of our approach for T+1[2] we set out last year, alongside an active communications strategy and market monitoring.

We’ve been speaking to participants across the market, including:

• buy-side and sell-side firms
• financial market infrastructures
• third-party service providers
• trade associations

This blog sets out our reflections from that engagement.

Where we expect firms to be with 1 year to go

With just over a year to go, we expect participants to have progressed well in the implementation stage. 

You should keep a particular eye on the UK Accelerated Settlement Taskforce[3] (AST) recommendations with a 2026 deadline and should now be finalising plans for testing and be familiar with the UK/EU joint testing plan[4] published in March this year.

Preparedness for the T+1 move is essential. If we see participants are not adequately prepared, we may take action. 

What our market engagement tells us about readiness

We’re pleased to say most market participants we’ve engaged with have met our expectations. This includes:

• Last year: finalising T+1 project plans and securing appropriate budget and governance for those plans.
• This year: advancing well in implementation efforts.
• Start of next year: being ready to test those changes.

Most have the AST’s critical recommendations for 2026 (as described below) at the forefront of their plans.

Some participants exceeded our expectations. They’ve already completed most of their system changes and will begin testing later this year.

We’ve also heard how participants are working to seize the opportunities T+1 creates.

When North America moved to T+1, those that used more automation saw improved settlement performance and a lower increase in operating costs, compared to those who used less automation. There was also a reduction in amounts required for clearing purposes.

However, some participants are considerably behind. Without significant and urgent remediation, they’re unlikely to be ready for the T+1 transition.

Some were yet to finalise their project plans and could not tell us about the changes they’d need to make to be ready for the transition. A very small number had not even familiarised themselves with the AST’s UK T+1 Implementation Plan[5].

We take a lack of readiness seriously, as it doesn’t just affect the firms in question but the wider system. We’ll follow up with them over this year, and expect their preparations to significantly improve.

Progress on 2026 recommendations: trade date allocations and confirmations, and SSIs

The AST expects participants to have implemented many of its critical recommendations by the end of December 2026.

These include:

• Making sure trades are allocated and confirmed by the end of trade date (T).
• Adopting the Financial Markets Standards Board (FMSB) standard for sharing standard settlement instructions[8] (SSIs).

We are generally pleased with market participants’ progress on those 2 recommendations.

Roughly half the participants we spoke to were already allocating and confirming trades by the end of trade date as their usual business practice.

Those that weren’t meeting that target explained what’s behind their current inefficiencies and how they’re resolving the problems.

For SSIs, many were already using centralised trade matching systems and told us they were in line with the FMSB’s standard. 

They were focused on making sure their clients were also using the FMSB’s standard, and this was a key feature of their client outreach.

Client engagement and outsourcing

Remember, you are only as strong as the weakest link in your settlement chain. It’s important to engage with clients, counterparties and third-party providers and remind them of their responsibilities in preparing for T+1 too.

Most participants we’ve spoken to had begun client outreach and were carrying out webinars and presentations to increase client awareness. 

Some had targeted, quite sensibly in our view, their outreach to clients that weren’t already allocating and confirming on trade date so they could work together to meet the deadline. 

We were also encouraged to see many using settlement performance data and other metrics to identify clients with poorer settlement outcomes and then target their outreach accordingly.

Many participants acknowledged their own readiness depended on clients, custodians and other service providers. They told us that outreach from their third-party providers was not sufficiently detailed and lacked targeted client-specific engagement.

Some said that their third-party providers had not yet communicated what operational changes the participants would need to make to prepare for the transition, with a particular concern around insufficient detail of third-party deadlines. Participants told us that the lack of data was impeding them from finalising their plans, making them unable to meet our expectations.

Our findings are in line with the Value Exchange survey, with two-thirds of firms reporting they did not believe their service providers are ready for the transition yet.

Settlement failures and reasons behind them

Well-prepared firms we’ve observed could tell us:

• their settlement failure rate
• top reasons for their settlement failures
• any efforts they were making to lower their failure rate

The most common causes of settlement failure we understand are:

• counterparties being short of stock or failing to deliver it
• SSI mismatches
• inventory management challenges

Some participants could not clearly tell us their settlement failure rate or the reasons behind them.

It is essential that participants can identify inefficiencies in their settlement processes so they can work to improve their performance and better prepare for T+1.

The AST and its members have identified many tools to help improve settlement outcomes. These include joint industry guidance[9] from the Association for Financial Markets in Europe (AFME), UK Finance, and the Investment Association (IA) on using place of settlement (PSET) and place of safekeeping (PSAF).

Operational technical readiness will be key to support the more timely processing T+1 requires.

We expect to receive settlement data from Euroclear UK and International (EUI) soon, which will allow us to pinpoint participants with particularly poor settlement performance.

If this applies to your firm, we’ll expect you to explain the factors behind it and the actions you are taking to improve settlement efficiency.

Fund settlement cycle

We discussed with buy-side participants the joint recommendation[10] from the IA, the Personal Investment Management and Financial Advice Association (PIMFA) and the Alternative Investment Management Association (AIMA).

The recommendation encourages buy-side participants to alter fund settlement timings to T+2 on or before the broader securities settlement cycle transition to T+1 on 11 October 2027.

Most had the ambition to transition their fund settlement cycle to T+2, although only a minority had concrete plans.

Participants raised a number of challenges, including different investor time zones, which could make it more difficult to operate a fund settlement cycle within compressed timelines.

Remember, not transitioning your fund settlement cycle to T+2 could lead to a wider mismatch with the broader securities settlement cycle.

We encourage you to have further discussions, including with your trade associations, and to start putting concrete plans in place to transition your fund settlement cycles.

What next?

As we move closer to October 2027, we will take an increasingly intrusive approach to our supervision.

We expect participants to demonstrate with clear evidence how you’re:

• implementing the systems and process changes in your project plans
• considering your testing strategies

Engagement across the market is a critical aspect of our T+1 work, and we will continue with it, alongside our active communications strategy and market monitoring.