On February 6, 2025, the United Kingdom’s Accelerated Settlement Taskforce (AST) published its T+1 Settlement Plan, outlining a code of conduct, implementation plan, and transition timeline. The UK plans to adopt a T+1 settlement cycle effective October 11, 2027. While this date may seem distant, the message is clear: market participants should begin preparations now.
To align with the accelerated settlement cycle, the UK Central Securities Depositories Regulation (CSDR) will be amended to enforce the updated settlement discipline regime. As CSDR is an EU regulation, the UK framework will need flexibility in case the EU and Switzerland do not transition on the same timeline.
A key takeaway from the report is Recommendation ‘Zero’, the idea that firms must take proactive steps ahead of formal regulatory requirements. Waiting for final rules could create unnecessary operational risk, so the industry must begin assessing automation, trade processing, and settlement efficiencies now to ensure a seamless transition.
During a DTCC webinar on Accelerating to UK T+1 that took place on February 24, 2025, Andrew Douglas, Chairman of the Accelerated Settlement Taskforce, cheekily remarked that the industry needs "Tinder for T+1”. His comment underscores the urgency of modernizing infrastructure and enhancing automation to prevent trade failures.
Key Implementation Details
The UK T+1 Code of Conduct recommends full adoption no later than December 31, 2027. After evaluating factors such as market holidays and index rebalancing, October 11, 2027, was determined as the optimal transition date. To support the shift, AST will publish a T+1 Playbook in 2026, providing guidance for market participants.
Currently, two key processing deadlines have been proposed:
Instruments expected to transition to T+1 include equities, corporate bonds, and other securities that currently settle on T+2. Gilts are already settled on T+1, and other asset classes will follow. However, bilateral transactions, mutual funds, and private placements will remain out of scope. ETFs will settle in accordance with their domestic underlying securities, while derivatives require further research and are not yet included. Additionally, the Code of Conduct calls on securities lending agents to automate recall processes and adhere to evolving best practices.
Market Readiness & Automation Imperatives
Matt Johnson at DTCC highlighted a significant challenge: currently, 25% of trade failures are due to standing settlement instruction (SSI) or place of settlement discrepancies, second only to security shortages. This underscores the urgent need for improving SSI market practices and increasing automation.
Although the EU and Switzerland have not yet confirmed their transition date, the European Securities and Market Authority (ESMA) remains optimistic about aligning with the UK’s T+1 timeline.
Key Takeaways: Communication & Automation
Historically, similar transitions have reinforced two critical lessons:
Recommendation ‘Zero’ adds a third key principle, the need for proactive industry action before regulations mandate change. Firms that begin upgrading their systems, improving operational workflows, and collaborating with custodians and counterparties now will be better positioned for a smooth transition.
As emphasized in the AST Implementation Plan:
“The sooner market participants automate or outsource processes to automated partners, the sooner T+1 benefits such as improved reaction time to market events plus reductions in risk will be realized and the more likely a firm will be able to successfully and efficiently operate in a T+1 environment.”
With just over two years until implementation, firms should act now to streamline workflows, enhance automation, and prepare for the next evolution in settlement efficiency.