Building Efficient and Integrated Securities Markets: What’s Next After T+1?

The Unfinished Business of T+1

Even a successful go-live will leave a significant number of issues unresolved. The North American experience — the United States, Canada and Mexico moved to T+1 in May 2024 — is instructive on this point. The transition delivered real benefits: clearing-fund requirements at the NSCC fell by more than 20%, and firms with strong automation and data discipline recorded meaningful reductions in counterparty risk and funding costs. But it also revealed that a compressed timeline tends to incentivize tactical fixes over structural reform. Firms met the deadline; not all of them emerged with the resilient, scalable infrastructure the new settlement cycle ultimately demands.

Europe’s transition will be more deliberate. The governance structures established through the EU T+1 Industry Committee’s 12 workstreams and the U.K. Accelerated Settlement Taskforce represent a serious attempt to ensure that the move to T+1 is treated as a strategic overhaul rather than a compliance exercise. Although it is mainly focused on the preparation and execution of the transition, the work of those committees will not conclude on go-live day. Securities financing transactions, certain derivatives and complex cross-border flows involving multiple CSDs and CCPs will require continued attention. Several issues will still need to be addressed after implementation in 2027. These include cut-off time alignment, handling settlement fails under compressed timelines and coordinating auto-splitting and partial settlement mechanisms across Europe’s fragmented CSD landscape. The EU’s gating event will also need to be managed and improved.

Reframing the Issuer-Investor Relationship

The settlement chain, connecting buyers and sellers, is only one element of post-trade market infrastructure. The other core element is the issuer-investor relationship, and important parts of this relationship — notably, the interactions between issuers, issuer agents and central securities depositories — have until recently received insufficient regulatory and industry attention. This upstream pipeline governs how securities are issued, admitted to trading and managed through their lifecycle: dividend payments, corporate action notifications, voluntary election windows and the flow of shareholder information.

T+1 does not directly affect the issuer-investor relationship, but it does place significant pressure on it. A settlement cycle of T+1 means that, following a trade, the holder of a security changes much faster, and — for a security subject to a pending corporate action — all parties in the custody chain have to adapt their processing of the corporate action to a much shorter timeframe. This is especially challenging for operational processes in the custody chain that are insufficiently standardized and automated.

Two significant regulatory initiatives are now bringing this gap into focus. The European Commission’s Market Integration and Supervision Package includes proposed amendments to Article 6 of the Central Securities Depositories Regulation explicitly designed to standardize issuance and admission processes across the EU. A further set of measures is anticipated in the European Commission’s planned 2027 review of the Shareholder Rights Directive, which is expected to address the standardization of corporate action processing and the quality of investor communications at scale. Separately, the European Central Bank has established a task force (the IMPACT Task Force) to examine the full range of upstream issuer-to-CSD challenges and develop recommendations for harmonization.

The stakes are not merely operational. Fragmented and inconsistent upstream processes create information asymmetries between issuers and investors, increase the risk of errors in corporate action processing and impose unnecessary costs on the intermediaries who manage these flows on behalf of their clients. Addressing this gap is a prerequisite for the kind of genuinely integrated European capital market that post-trade reform is ultimately meant to support.

The Digital Asset Horizon

Beyond regulatory deadlines and incremental harmonization lies a more fundamental structural shift. Global capital markets are at an inflection point, moving toward an always-on operating model, while distributed ledger technologies (DLT), including blockchain, are becoming mainstream. These megatrends are reshaping financial markets by increasing liquidity, transparency and mobility and are propelled by clear drivers: the growing adoption of digital market infrastructure, the expansion of digital cash equivalents and tokenization, the compounding power of interoperability and the network effect, and regulation acting as a catalyst for growth. This transformation is not about blockchain replacing traditional systems; it is about the two working in concert to reshape the future of finance. Client demand is accelerating the shift, as investors and issuers increasingly expect the speed, certainty and round-the-clock access that digital infrastructure can deliver.

The potential of tokenization is now widely acknowledged and its capabilities are starting to be demonstrated through initiatives moving well beyond proof of concept. Programmable settlement, atomic delivery-versus-payment, near-instantaneous finality and the collapse of reconciliation overhead are not theoretical propositions but achievable outcomes. Digital assets enable greater efficiency, utility and transparency — helping clients move money faster, more securely and with certainty around the clock.

Realizing that potential centers, above all, on standardization. Fragmentation is a feature of both the new and the traditional. On the digital side, securities are issued and settled on incompatible DLT networks with limited interoperability. On the traditional side, the architecture on which systemic activity relies remains a patchwork of legacy systems, divergent messaging protocols and jurisdictional frameworks. Without common standards governing asset representation, transaction validation, messaging and legal finality — and clear connections between tokenized and traditional settlement rails — digital asset markets will remain siloed rather than integrating with the broader financial system.

Critically, the standards required for tokenized markets will not be developed in isolation. They will interact with and, in many cases, require amendments to the ISO messaging standards, data taxonomies and regulatory frameworks that the T+1 transition is already prompting firms to upgrade. The reform agenda is cumulative: each layer of standardization creates the foundation on which the next can be built.