The T+1 transition

May 2026

As October 2027 moves from a distant milestone to a looming deadline, firms are increasingly under pressure to grasp the reality of the changes needed to meet the UK, EU and Switzerland’s deadline for T+1 settlement.

What are the key challenges that firms need to be on top of now and in the run up to the deadline? Read on to find out more.

T+1 at a glance

What’s changing: UK, EU and Swiss capital markets are moving from T+2 to T+1 settlement by 11 October 2027, compressing post‑trade operations.
Why does it matter: Inadequate preparation could result in increased settlement fails and reputational, operational and liquidity risks. Issues associated with data quality, accuracy and third party dependencies are likely to be the primary cause.
Regulatory implications: Authorities and regulators have mandated the transition and will be increasingly monitoring and supervising firms’ progress with interest.
Who’s impacted: The changes will impact trade initiation, execution, and matching/confirmation at banks, brokers, custodians, wealth managers and asset managers that trade in European securities.
Next steps: Firms should treat T+1 as a major change programme, standing up firm-wide implementation programmes with senior accountability and sufficient resources.

Overview

Following the North American transition, Europe is set to follow suit in October 2027. While previous preparations for the North American transition will provide some firms with a sense of what is required, the European transition will be significantly more complex given the wider scale of venues, depositories, regulators and currencies that will be impacted.

Firms that are successful will be operationally ready in good time, have systems that ensure data accuracy and deliver prompt reconciliations, and automate processes to the extent possible. Typically, the transition is being owned by COOs in firms with significant support and input from individuals responsible for operations, technology, risk, compliance, client money and assets and finance and treasury teams.

The FCA has set out its expectations in several publications (including most recently in its wholesale markets priorities) and will closely supervise implementation. Firms are likely to find industry initiatives useful to identify best practice to meet regulatory expectations, such as that defined by the UK Accelerated Settlement Taskforce (AST) guidance.

Firms will want to focus on the overall strategic approach (tactical fix vs meaningful long-term solution), ensuring data quality and accuracy and weighing up the cost of change vs resilience trade-offs.

With two years to go, we expect all firms to be planning and preparing now to support the transition to T+1 settlement. Where proportionate, firms should ensure any existing manual processes currently used to support the settlement process are sufficiently automated to facilitate a faster settlement cycle.

FCA letter – “Dear Compliance Officer of an Asset management or Alternative firm” October 2025

Key areas to address

The following areas are those that are likely to be the most critical to tackle and which could present the greatest implementation challenges for firms:

Trade allocation, confirmation, matching and settlement

Automation will be critical across these processes for many firms, given the reduced timeframe for settlement. Existing end-of-day allocation approaches are unlikely to be fit for purpose and asset managers that overly rely on their brokers and/or custodians will potentially be exposed. T+1 effectively eliminates tolerance for late allocations and manual intervention. It will be especially important to align safekeeping and settlement locations as well as post-trade process definitions across the market to reduce exception handling.
Securities lending and collateral

Optimising and automating securities lending, repo and collateral processes (including recall) will be especially important because of more pressing market deadline cut-offs. Firms will benefit from real-time position management to manage liquidity exposure in a compressed settlement window.
Testing

Firms should align themselves with industry guidance on effective testing (see for example guidance by the AST). Firms should test required changes to internal processes and technology throughout 2026, including updates needed to leverage new or existing functionality. Firms should participate in the scheduled market-wide testing windows and can further de-risk the transition by benchmarking their test KPIs against market averages published by the AST.
CASS

Firms should consider the impact of a compressed settlement cycle on their CASS operating model, particularly in relation to reconciliations, settlement management, books and records and segregation. A key risk is linked to timing and the accuracy of books and records, as systems will need to be recalibrated to reflect the new settlement window. Failed trades present an additional risk, particularly at firms reliant on manual processes and not set up to deal with increased settlement fails. This is because the compressed timelines will reduce the time firms have to identify and resolve exceptions and associated client money and custody asset positions before they crystalise into shortfalls and reconciliation discrepancies.
Fund unit settlement

Many funds settle on a T+3 or T+4 basis today. Regulators have indicated that as the securities settlement cycle shortens, fund managers should consider shortening the fund unit settlement cycle. The FCA for example has recommended that relevant funds move to a T+2 cycle, noting that firms would need a strong justification where fund settlement is longer than T+2. Fund managers should work with transfer agents and distributors on required operational changes and consider impacts on fund liquidity and disclosures.
Corporate actions

Systems that handle event management will need to incorporate T+1 considerations into event management to mitigate the fail risk associated with record date mismatches. Payment dates on asset distribution events will need to be adjusted.
Third party oversight

Effective collaboration with third parties and overseeing outsourced relationships will be key. Firms will want to revisit existing SLAs and identify any areas of concentration risk.

What needs to happen when?

Firms should already have familiarised themselves with regulators’ expectations and industry guidance and put in place a detailed project plan with sufficient budget and resources.

By the end of 2026, firms are expected to have implemented all identified changes, for example, the standardisation of Standard Settlement Instructions (SSIs) and trade date timing for allocations and confirmations.

Over 2027, firms should be carrying out internal testing and testing with third parties so that revised processes are ready and reliable by the October deadline.

How KPMG in the UK can help?

We can assist firms with several aspects of implementation, including support with:

Impact assessment: Support with your assessment of the impact of the transition on clients, processes, people, data and technology.
Transition strategy: Build and/or challenge your programme planning and budget, communication and training, and vendor strategy and risk management.
Build implementation: Support with defining use cases and prioritising the delivery plan, and designing and building the T+1 solution.
Programme management: Defining programme governance, supporting stakeholder buy-in and alignment, and testing strategy and benchmarking KPIs.