UK and EU Banks Enter Final Year of T+1 Preparations

Banks and securities firms across the UK and European Union are entering the final year of preparations for the move to T+1 settlement on 11 October 2027, with regulators and advisers warning that operational readiness now needs to translate into demonstrable execution.

UK and EU Banks Final Year of T+1 Preparations

The change will shorten the standard settlement cycle for securities trades from two business days to one, bringing Europe into line with markets including the US and Canada, which moved to T+1 in 2024.

The UK’s Financial Conduct Authority expects firms to be implementing system and process changes during 2026 and to be ready to test those changes by the end of the year.

Automation Moves to the Centre of Readiness

Rollo Burgess, partner at consultancy Capco, argues that firms now need to prioritise automation, particularly around trade confirmations and the management of standing settlement instructions.

Larger broker-dealers are broadly on track, he said, but substantial work remains across the wider market.

That task is being complicated by competing technology programmes, including the rollout of AI across banking organisations. While AI could ultimately support faster settlement, it is also consuming management attention and development resources at a critical point in the T+1 timetable.

Senior executives therefore need evidence that programmes are progressing as planned, rather than relying on high-level assurances.

Liquidity and Funding Costs Could Become the Bigger Issue

Meeting the regulatory deadline is only part of the challenge.

As more post-trade activity moves into the same business day, firms may need to rethink how they manage inventory, funding and securities borrowing.

Poor preparation could increase short-term borrowing requirements or stock-borrowing costs, eroding already tight margins even if settlement failure rates remain under control.

The FCA has also stressed the importance of operational resilience, third-party arrangements and counterparty readiness, warning that it may intervene where firms are not adequately prepared.

T+1 May Be a Staging Post Rather Than the Destination

Some industry participants are already looking beyond next-day settlement.

Marius Jurgilas, chief executive of Axiology, argues that firms should use current investment programmes to prepare for T+0 and atomic settlement, rather than treating T+1 as the end point.

His argument is that digital securities infrastructure can already support faster models, and that institutions risk paying for another technology overhaul if they build only for the 2027 requirement.

That view reflects a broader shift in post-trade thinking.

T+1 is primarily a compression of today’s settlement model. The more strategic question is whether banks use the transition to automate existing processes, or to redesign them for a future in which settlement becomes near-instant and potentially atomic.