The United Kingdom’s financial sector is making slow but steady progress in preparing for the implementation of the T+1 settlement system, which will halve the settlement time for securities transactions from two business days to one. However, a recent survey shows that a significant portion of financial firms expect to miss key preparatory deadlines, raising concerns about market readiness ahead of the October 2027 rollout.

---

Overview of T+1 Settlement System

The T+1 settlement system, which mirrors the U.S. transition in 2024, requires stocks and bonds to settle within one business day. The move is aimed at reducing counterparty risk, increasing market efficiency, and enhancing overall financial stability. The European Union will implement the T+1 system on the same date as the UK, creating a coordinated approach across major global markets.

---

Survey Reveals Mixed Readiness

A survey of 350 brokers, asset managers, and financial market infrastructure firms conducted by research firm The ValueExchange and the Accelerated Settlement Taskforce (AST)—a government-backed body overseeing the transition—revealed:

• 95% of respondents are actively preparing for T+1, up from 81% at the start of 2025.
• 40% expect to miss the interim December 31, 2026 deadline, which requires trade allocations and confirmations to be completed on the same day as the trade (T+0).
• Two-thirds of respondents indicated that their third-party service providers may not be ready by the full T+1 rollout in October 2027.

Andrew Douglas, AST chair, said:
“This level of preparation at this stage is encouraging and reflects strong industry engagement. While challenges remain around third-party readiness, the UK benefits from lessons learned during the U.S. T+1 transition.”

---

Regulatory Oversight and Industry Concerns

The Financial Conduct Authority (FCA) has highlighted potential risks, particularly for small and mid-sized asset managers, who may be unaware of the operational changes required for T+1. The FCA has urged firms to accelerate planning to avoid settlement delays, higher remediation costs, and increased regulatory scrutiny.

A spokesperson for the FCA stated:
“Where we see actions or inactions that could harm market integrity, we may look to intervene further.”

Additionally, the UK Treasury recently published draft legislation confirming that the October 2027 deadline will be mandatory, reinforcing the government’s commitment to ensuring timely market adoption.

---

Implications for the UK Financial Market

The transition to T+1 is expected to have wide-ranging effects on the UK securities market, including:

• Faster settlement cycles and reduced counterparty exposure
• Increased demand for real-time trade allocation and confirmation systems
• Pressure on third-party service providers to upgrade technology and processes
• Greater regulatory oversight to ensure compliance with the new system

Failure to meet key deadlines could result in settlement delays, operational disruptions, and increased compliance costs, highlighting the urgency for firms to prioritize readiness.

---

Conclusion

While the UK financial sector shows strong engagement in preparing for T+1, challenges remain, particularly around third-party provider readiness and adherence to interim deadlines. With the mandatory October 2027 implementation date approaching, firms must accelerate their preparations to ensure a smooth transition. Lessons from the U.S. T+1 rollout offer valuable insights, but continued oversight and proactive planning are essential to protect market integrity and operational efficiency.