T+1 settlement cycle in the UK, EU & Switzerland

In February 2025, the Accelerated Settlement Taskforce (AST), through its Technical Group, published a report that outlines the UK’s strategy to move to a T+1 securities settlement cycle by 11 October 2027. This transition is aimed at improving market efficiency, reducing counterparty risk, and keeping the country in step with global market developments.

The report proposes a UK T+1 Code of Conduct that includes 12 ‘critical’ and 27 ‘highly recommended’ actions covering end-to-end securities settlement lifecycle.

It also suggests that participants initiate phased operational and behavioural adjustments in 2025-26 to ensure the UK is operationally ready for T+1 before the deadline, minimizing disruption and maintaining market competitiveness.

The European Securities and Markets Authority (ESMA) has also proposed shifting the EU securities settlement cycle to T+1 by 11 October 2027, the same deadline as the UK.

To support this change, ESMA recommends updating regulatory frameworks like the Central Securities Depositories Regulation (CSDR), greater investment in automation and post-trade infrastructure, and a coordinated implementation strategy involving the multiple regulators, central banks, central counterparties, central securities depositories, and industry participants to ensure smooth transition.

ESMA have identified 3 phases for the transition:

• A planning phase with the finalisation of technical solutions by the industry to be completed by Q3 2025
• A development phase for industry implementation to be completed by Q4 2026
• A testing phase over 2027 until the transition date

In January 2025, the Swiss Securities Post-Trade Council (swissSPTC) also recommended that the domestic markets in Switzerland and Liechtenstein transition to a T+1 settlement cycle, with implementation targeted for 11 October 2027.

This recommendation has been acknowledged by the Swiss State Secretariat for International Finance (SIF). In response, SIX Swiss Exchange will initiate the process of seeking approval to amend its Rule Book to support the new settlement cycle at the appropriate time.

The swissSPTC Task Force T+1 conducted a comprehensive review of specific proposals and provided recommendations to facilitate the transition. Market participants in Switzerland and Liechtenstein are encouraged to continue advancing their internal planning to adopt the shorter settlement cycle and ensure they are well-prepared for a smooth migration.

Accelerating the settlement cycle enhances both capital and settlement efficiency, while reducing post-trade risks. Early preparation is essential —clients should secure investments, review systems, and optimise processes for a successful transition.

Critical Areas for Assessment:

• Settlement Efficiency: Review operational schedules, especially for APAC firms facing time zone differences. CSD functionalities such as auto partial settlement and hold & release should be utilised as much as possible.
• Automation Investment: Transition from manual to automated processes is vital.
• Static Data Quality: Ensure accuracy of Standing Settlement Instructions (SSIs) to minimise fail risk.
• Fails Implications: Anticipate increased fail trades during transition, with potential CSD fines and CSDR penalties.
• Liquidity Management: Align FX cut-off times and liquidity to support timely settlement.
  
• Multiple Jurisdictions: Increased complexity with multiple CSDs, FMIs, and currencies; multi-listed products like ETFs may face higher fail rates due to misaligned settlement cycles.
• Funds Settlement Cycle: Accelerate fund settlement to T+2, to mitigate liquidity risk if underlying securities settle on T+1.

Implications for Asia-Based Clients

Asian clients will face significant operational pressures due to time-zone differences, as key cut-off times for UK and EU markets may fall outside standard business hours. This compresses the window for trade confirmation, allocation, FX funding, and break resolution.

Recommended Actions:

• Extend operational coverage
• Eliminate manual overnight dependencies
• Strengthen FX arrangements for timely cross-currency funding
• Ensure straight-through processing (STP) across the trade lifecycle

The role of Technology and Automation

T+1 represents a fundamental transformation of operational architecture. Market participants must review all systems and processes to identify and eliminate manual activities. Reliance on spreadsheets, email workflows, or legacy tools increases the risk of settlement failures and liquidity shortfalls. Automation is not optional—it is the cornerstone of a successful T+1 transition.

Standing Settlement Instructions (SSIs)

Accurate and up-to-date SSIs are critical. Manual entry or outdated SSIs significantly increase settlement failure risk. Both AST and ESMA highlight SSIs as a high-risk area in a T+1 environment.

ETFs

ETFs with global underlying assets will encounter increased timing pressures due to multi-market settlement cycles. Authorised Participants, market makers, and investors must revisit creation/redemption workflows and adjust to new cut-off times. Enhancing automation and ensuring intraday transparency will help reduce operational friction.

This summary is designed to provide business leaders and operational teams with a clear, actionable overview of the global transition to T+1, highlighting strategic considerations and practical steps for successful adaptation.