With just a year to go before the final October 2027 deadline, the countdown is on for firms to transition to a next-day settlement timeline. Andrew Douglas, chair of the UK Accelerated Settlement Taskforce, lays out what the UK financial ecosystem must accomplish if it is to smoothly transition to T+1 next year. 

The 11 October 2027 deadline is now within reach as we enter the final year before the UK, EU and Switzerland move to T+1 settlement.

Time has flown by since we published the UK T+1 Implementation Plan in February 2025, and encouragingly the industry has made good progress, with our latest research showing that 83 per cent of firms are actively engaged in preparing for T+1. However, at this stage, readiness must now be the key focus, rather than just engagement. 

The next 12 months need to be about firms implementing and then testing their processes to ensure that they are T+1 compliant. For everyone, that means understanding both their own readiness and that of their clients, counterparties and service providers. Fund managers especially need to address funding, FX and allocations processing whilst custodians, brokers and vendors need to ensure their clients have the information and services they require to transition successfully.

Over the coming year, you need to be checking with all segments of your ecosystem to ensure end-to-end preparedness and compliance to achieve next-day settlement. 

Automation must accelerate

Automation is one of the essential behaviours identified in the T+1 Implementation Plan. 

Moving from T+2 to T+1 might appear to halve the settlement timetable, but the operational impact is considerably greater. In reality, firms will have just 20 per cent of the time currently available to complete 100 per cent of all post-trade processing including allocations, confirmations, matching, funding, FX, recalls and corporate actions. 

Trying to accommodate that by asking operations teams to work longer or simply hiring larger teams is neither cost-efficient nor sustainable. We saw this in the US, where firms that had not adequately automated had staffing costs increase by as much as 18 per cent as they bought in additional resources to cope with compressed processing windows. 

To automate these post trade activities, firms can build or outsource solutions, while targeted changes such as automated confirmations, standardised messaging and real-time reconciliation can remove important manual touchpoints. Crucially, high-quality data must underpin all automation. Straight-through processing only works when accurate information reaches the right place at the right time, and so firms must also up their data governance game. 

With so little time left, firms must also now know exactly where manual interventions remain, why they’re necessary and whether they fit within a T+1 timeframe. Where they don’t, and they largely won’t, firms must work to eliminate them.

Failed settlement comes at a cost

Settlement failure is already extremely costly with financial firms globally spending $914.7bn addressing settlement failures over the decade to 2024. 

As is clear, under T+1, firms will have even less time to identify and correct the problems that cause failure meaning higher exception-management costs, additional funding and liquidity pressures and complications around FX, if automation and data governance are not the cornerstones of your T+1 strategy.

Firms will also have to contend with the reputational consequences that increased failure rates bring. A counterparty that repeatedly misses deadlines or provides incorrect information creates more costs for everyone in the settlement chain and could mean losing out on future business. 

Settlement performance will therefore become an increasingly visible measure of operational efficiency. The post-transition settlement rate target will be based on the average CREST settlement rate achieved during the preceding three months. The Accelerated Settlement Taskforce will begin publishing rolling three-month averages from 2027, giving firms an idea of what they are working towards. 

As a priority, firms need to understand why their trades fail or are late today and address the underlying causes while there is still time to do something about them.

The deadlines before the deadline

11 October 2027 is the ‘deadline’, but it is not the only date firms need to be focused on.

Several important Implementation Plan milestones fall on 31 December 2026. By then, allocation and confirmation processing, where carried out, should be completed as soon as reasonably practicable and no later than 23.59 UK time on the trade date. 

The same year-end milestone applies to implementation of the FMSB Core Principles and templates for SSIs and automation of securities lending recalls and return instruction flows in line with ISLA market practice. 

Meeting these deadlines puts you in an ideal place to start testing when the end-to-end test windows open in February.

This also means testing dependencies. Fund managers, custodians, administrators, brokers, banks and intermediaries all need to be checking with each other that they are ready. Firms relying on technology providers also need to know when solutions will be available and when they can test them.

On implementation, settlement instructions should reach the CSD as soon as reasonably practicable, before relevant intermediary deadlines and no later than 05.59 UK time on T+1. 

The next year is therefore not simply a countdown. It should be a progression from implementation, to testing, to operating confidently within the new timetable.

Making 11 October 2027 a boring day

I am often asked what I hope happens on 11 October 2027. My answer remains the same: I hope nothing happens and it is simply another day at the office. 

By then, firms should have implemented their changes, automated the processes that need automating, tested their systems and worked through dependencies with clients, counterparties and service providers. Ideally, many firms will already be operating on a T+1 timetable before the requirement formally takes effect.

One of the key behaviours in our Implementation Plan was “action this day”. A year out, most firms have taken their first action. Now the job is to finish the work, prove that it operates properly and make sure the organisations on either side of every transaction are ready too. If we achieve that, 11 October 2027 should simply feel like business as usual.

Andrew Douglas is chair of the UK Accelerated Settlement Taskforce