UK cash equities will begin trading on a T+1 settlement cycle from 11 October 2027, T+1 Accelerated Settlement Taskforce (AST) has confirmed. This marks an alignment with the EU’s transition date.
Andrew Douglas, chair of the AST technical group, told Global Trading: “The UK and the EU independently reached the same conclusion on date, which in my view confirms the validity of 11 October as the best date.”
The AST was established in December 2022 by then-Chancellor Jeremy Hunt. Tasked with determining the timeline for a T+1 transition in the UK, and the operational and technical changes this would require, the committee provides recommendations to the government, regulators and market participants. Members include representatives from major banks, such as Citi and Goldman Sachs, infrastructure providers and trade associations.
In its final implementation plan the taskforce has outlined a code of conduct for T+1 (UK-TCC), including twelve actions within four business areas which must be made by all market participants to facilitate the transition. A further 27 actions are ‘highly recommended’.
Firstly, the taskforce requires the Treasury to amend the central securities depository regulation (CSDR), an EU and UK regulation focused on cross-border settlement in the region. Trading venues are requested to update their rulebooks to align with T+1, taking the scope of the settlement cycle into consideration. Prior to implementation, financial market infrastructures (FMIs) must remove any barriers to T+1 that may exist in their current technology, procedures and operations.
Douglas elaborated: “The major update required is to replace references to T+2 with T+1 and to review the FMI’s own processes and procedures for other impacts and amend accordingly. These are Critical Recommendations Zero B, FMI 01a and FMI 01b, and we will see the result of this analysis (FMI01a) by the end of 2025.
“As regards CSDR, our recommendation Zero A covers the request to HM Treasury and the detail is clearly set out in Sections 1.1-1.4 of the implementation plan. We believe this is comprehensive.”
The taskforce also advises that the CREST settlement system modernisation project avoids scheduling major changes to systems immediately before, during or after the T+1 go-live. A response from the EUI on an updated timeline is expected to be received in the first half of 2025.
Stock lending recalls are another key issue. According to the plan, the International Securities Lending Association (ISLA) will develop timing guidelines for optimal practices in this space, with consideration to cash market sale trade execution, communication in the securities lending workflow and recall coverage. Recalls should be automated either in-house or through vendor partnerships, the group said, and instruction deadlines must align with end-of-day at the LSE.
Once operational, the Financial Markets Standard Board’s standards for sharing of standard settlement instructions must be followed by all market participants.
In a statement, the Treasury said: “The government welcomes this report and will set out its response shortly.”
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