Posted: 14/02/2025 | Read time: 3 minutes
- What T+1 Means for UK Firms?
- Lessons from the US T+1 Transition
- Preparing for T+1: Key Capabilities Your Solution Must Have
- The Countdown to T+1 Has Begun – Is Your Firm Ready?
The UK financial market is entering a new era with the shift to a T+1 settlement cycle, now scheduled for October 11, 2027. This transition, recommended by the Accelerated Settlement Taskforce, aims to enhance operational efficiency, reduce counterparty risk, and align the UK with global market standards.
With the U.S. completing its move to T+1 in 2024, UK firms must now assess their settlement and reconciliation processes to ensure compliance. Automation and real-time reconciliation technology, such as AutoRek’s financial controls platform, will be critical in mitigating risk and streamlining operations.
What T+1 Means for UK Firms?
Currently, UK securities transactions settle on a T+2 basis, meaning trades are finalized two business days after execution. Moving to T+1 shortens this window to just one business day, requiring firms to adapt their trading, reconciliation, and risk management workflows.
The Accelerated Settlement Taskforce’s Technical Group has outlined key priorities for financial institutions:
- Updating rulebooks and procedures – Trading venues must revise default settlement processes to comply with T+1 requirements.
- Enhancing allocation and confirmation processes – Trades must be allocated and confirmed electronically by 11:59 PM UK time on trade date (T+0).
- Prioritizing automation – Firms need to adopt real-time data exchange, straight-through processing (STP), and automated reconciliation to meet tighter settlement deadlines.
These steps emphasize the importance of automated reconciliation tools to prevent settlement failures and ensure compliance.
Lessons from the US T+1 Transition
The US transition to T+1 in 2024 provided key insights into the challenges and benefits of accelerated settlement cycles:
- Greater reliance on automation – Firms that implemented automated reconciliation and real-time data processing saw fewer settlement failures.
- Proactive trade monitoring – Identifying trade discrepancies earlier in the cycle reduced risk and financial penalties.
- Stronger operational resilience – Organizations with flexible, technology-driven reconciliation platforms experienced a smoother transition.
For UK firms, investing in automation now will be essential to managing the T+1 transition efficiently.
Preparing for T+1: Key Capabilities Your Solution Must Have
To successfully transition to T+1 settlement, firms must ensure their systems and processes can handle the demands of faster settlement cycles. Key areas to assess include:
- Automated Reconciliation – Can your solution quickly identify and resolve trade discrepancies to prevent failed trades and ensure timely settlement?
- Real-Time Data Processing – Does your system support instant trade validation and processing, eliminating delays from batch-based workflows?
- Enhanced Risk Management – Are you able to monitor and address settlement risks proactively, rather than reacting after issues arise?
- Comprehensive Audit Trail – Do you have full visibility and an auditable record of transactions to meet regulatory and compliance requirements?
- Seamless Integration – Can your solution connect with existing trading, clearing, and financial systems without major infrastructure overhauls?
Assessing these capabilities now will help firms avoid settlement failures, reduce risk, and ensure a smooth transition to T+1 before the October 11, 2027 deadline.
The Countdown to T+1 Has Begun – Is Your Firm Ready?
With the UK’s T+1 settlement deadline confirmed for October 11, 2027, financial institutions must act now to prepare for the shift.
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