On 11th October 2027, the UK will transition to a T+1 settlement cycle, where certain trades will need to be settled within one business day. This shift is designed to bring the UK into alignment with global standards and boost market efficiency.
Make changes now
As T+1 is likely to reduce the time to process transactions by about 80%, it’s important to start planning now how you will make the changes. Complying with financial regulations can be difficult, particularly when changes are happening. It may be helpful to make use of FCA compliance consultants like //www.adempi.co.uk/ to make sure you fully implement all relevant new regulations.
Factors to consider
Look at how you are managing your inventory. You need to know where your securities are and ensure that they are in the right place for quick access.
Using automation will enhance your ability to cope with T+1 settlements, allowing you to act efficiently and reduce the chances of penalties for late settlement. As it can take time to adjust to automation, look at your options now so you are prepared for when T+1 settlement comes in.
Make sure all your clients and counterparts are fully aware of the changes and that they understand your new arrangements. This should include reviewing your end-to-end settlement arrangements, such as the settlement, clearing and trading, looking to see where you can make improvements.
Do not rely on a successful transition in the US. There are a number of differences, including the US having a longer lead-in time, that make the UK arrangements more complex.
