The UK is gearing up to transition to a T+1 settlement cycle for securities trades by October 2027, following in the footsteps of the US, Canada and Mexico. This shift is part of a broader global initiative to accelerate the settlement of securities trading and improve market efficiency. It comes at a time when the UK Government is pushing a growth and competitiveness agenda, so it is a well-timed move, aiming to modernise and streamline financial markets in the UK, increasing efficiency and reducing settlement risk.

In December 2022 the UK government took significant steps to explore the potential for faster settlement. By March 2024, the Accelerated Settlement Taskforce (AST), recommended 12 critical and 26 highly recommended actions for a successful transition to T+1. The AST report was accepted by the government on 19 February 2025, committing to legislating the move to T+1 by October 2027.

The goal is to align the UK’s transition with similar efforts across the European Union, minimising costs for multi-jurisdictional firms. Q4 2027 may seem like a distant future, but firms are being prompted by the FCA to be proactive in their preparation for T+1 by following these four steps:

1. Read the AST Report
   
   The AST report is essentially the blueprint for T+1 settlement. It outlines the technical and operational changes needed for the move to T+1. Firms must review which recommendations they should take on board and implement plans accordingly.
   
2. Plan Early
   
   Firms must start planning now. This involves identifying the necessary changes, evaluating current systems and making upgrades as needed. The earlier changes are made, the more efficiently firms can implement them.
   
3. Budgeting
   
   Firms should allocate resources for upgrades, system changes, advisory work and any new technologies needed. The AST recommends that firms budget in 2025 to ensure sufficient resource availability.
   
4. Act to Implement and Test Changes
   
   Firms must implement changes and test them early to ensure a seamless transition in October 2027. Internal testing and engaging with counterparties is key to addressing any potential issues.
   
   

The FCA’s Approach

The Financial Conduct Authority (FCA) will monitor progress and ensure firms meet the required standards. The regulator will provide guidance, address any barriers. and monitor market activity, being ready to intervene if necessary to ensure market integrity. Given the global nature of securities markets, international coordination is essential for a smooth transition. The FCA is learning from the experiences of markets like the US to ensure the UK’s transition is as efficient as possible.