Overview—What is T+1?

Global markets are shortening the settlement cycle from settling two days after the execution date, to one day after execution as a T+1 settlement cycle. Markets have already been gradually reducing settlement cycles by operating at T+2 but in May 2024, the US, Canada, Mexico and Argentina each went live with T+1 settlement. 

The EU, Switzerland and UK recently announced a pan-European intention to transition to T+1 by the end of 2027, with 11 October 2027 as the current target date. 

Why is T+1 being introduced?

It is anticipated that the move to T+1 will:

• Reduce the number of unsettled trades outstanding at any given time
• Provide investors with quicker access to their funds
• Force process automation—encourages trades to be booked correctly on trade date and streamline matching processes
• Reduce period for market price fluctuations—expected reduction in variation margin calls, likely resulting in cost savings
• Reduce risk—reduces credit, market and liquidity risk arising from unsettled trades

Who does it apply to?

All market participants operating in the EU, Switzerland and UK markets are expected to transition to T+1 settlement. 

Key Impacts

All impacted firms must ensure they are prepared and have made the necessary operational changes and technological upgrades required to settle trades in one day.

Operational Procedures and Systems

It will be equally important to automate back-office operations to maintain the pace of settlement and clearing activity. Firms should upgrade legacy systems and processes that might not be able to support trading, matching and settlement on a T+1 basis to reduce operational risk.

Europe has a complex post-trade landscape with multiple market infrastructures to consider and several currencies, providing a challenging backdrop in which to transition.

Reduction in Processing Time

Research by Association for Financial Markets in Europe (AFME), highlights that losing one day in the settlement cycle does not simply mean having 50% less post-trade processing time: market participants will be moving from having 12 hours to 2 hours of post-trade operations time, an 83% reduction. This is the industry challenge to focus on trade date for input and matching of correct settlement instructions.

Automation

Automation is at the heart of the T+1 transition. Industry participants and market infrastructure providers are working together to define the infrastructure and process changes along with operational requirements to position the market for a successful transition.

As we learned from the US transition in May 2024, relying on manual resourcing and tactical workarounds is not sustainable.

Transition Plans to T+1

In February 2025, the UK’s T+1 Accelerated Settlement Taskforce (AST) set out its third report, an implementation plan for the transition to T+1. This detailed report contains 43 recommended actions and expected behaviours which all market participants are expected to comply with, detailed in the UK T+1 Code of Conduct. The AST Technical Group is acting as the coordinator for UK markets preparations for transition.   

In the EU, ESMA published a report in November 2024 detailing its approach to T+1 and in January 2025, established an industry committee supported by technical workstreams to oversee and manage the operational, regulatory and technological aspects of the transition. The current focus is to provide a roadmap for implementation by Q2 2025 and a playbook in Q3 2025.

In January 2025, Switzerland announced that it would adopt the same transition date as the EU and UK and in case of a delay by either jurisdiction, it will transition with the ‘first mover’ provided the date is no earlier than October 2027.

Both the EU and UK are taking similar approaches to the T+1 transition by establishment of industry led working groups and are working towards an aligned transition timeline.

Industry Engagement

BNY Pershing EMEA and the wider BNY group are actively participating in the industry dialogue to the UK and the EU’s approach to implementing T+1, including the scope and the risks of the UK and EU not aligning.

We are active participants in both the EU and UK technical working groups and have contributed to several industry comment letters to the HM Treasury and well as responding directly.

Linda Gibson, Head of Regulatory Change (February 2025)

“Given the compatibility of the date of 11 October 2027, there is now momentum to drive towards a coordinated pan-European transition to T+1 which is good news and in line with our advocacy.

The transition to T+1 is a multi-year effort that will see industry participants assess and address changes to front, middle and back-office systems and processes. The call for action is for market participants to start preparations now in 2025 to be ready for an October 2027 go-live.

We can learn a lot from the US move to T+1. Firms that transitioned to T+1 settlement across the US markets in May 2024 will have the benefit of a recent playbook and know that preparation, automation and communication are key. However, they will still need to navigate the market infrastructure complexities and fragmentation across the EU market.

Communication along the entire chain needs to be in focus across the market, from custodians to counterparties to clients—all of which will be key to ensure the post-trade processes run as smoothly as possible and to avoid a potential increase in settlement fails.

We continue to participate in both the UK Accelerated Task Force and EU Industry Committee and be the voice of our clients.”