The UK, EU and Switzerland will move to T+1 settlement on 11th October, 2027. Many firms have already experienced this back in 2024, when the United States, Canada and Mexico did the same. That may give firms a level of insight they didn’t have the first time around, but the upcoming shift brings a number of unique challenges.
The core issue remains the same, though: firms will have around 20% of the time to do 100% of the work.
We sat down with Andrew Douglas, chair of the UK Accelerated Settlement Taskforce, to discuss shrinking settlement windows in the UK and Europe. His career spans nearly 40 years in Operations in clearing and settlement, and prior to joining the taskforce he previously worked at the DTCC during the US move to T+1 in 2024. Not only that, but he is now the chair of the UK Digital Markets Taskforce as well, looking at a ‘hybrid finance’ model where traditional and decentralised finance operate side-by-side.
In other words, Douglas has not only seen it all before - he knows what’s coming next. Here are the essential insights from our conversation.
1+1 doesn’t equal 2: Why things are very different compared to US T+1
There is a lot of focus in the market on what firms can learn from the transition to T+1 in the US, Canada and Mexico. Douglas notes that there is “an element of transferability”, and that firms in the UK are already used to settling on T+1 for instruments such as gilts.
However, Douglas warned that this doesn’t mean firms are all set for UK and EU T+1.
“If you did the US T+1 move you shouldn't just assume you're good to go for Europe and the UK. You need to do the research. You need to do the work. There are some fundamental differences between the UK and the EU.”
One key difference between what happened in the US and the upcoming changes in the UK and Europe is that in the former, T+1 is a single-sided obligation. Brokers who had to settle on T+1 were able to offer “manufactured T+1” on behalf of their counterparty by settling a trade and warehousing it overnight, for a fee.
In the UK and Europe, the mandate is dual-sided. Both parties must settle within the T+1 timeframe.
On top of this, you have different regulatory approaches and an entirely different settlement landscape to deal with. The difference is most obvious when considering Europe, which has 27 different jurisdictions and 32 different central counterparties (CCPs) and central securities depositories (CSDs).
Additionally, the national regulators have different approaches. Europe works similarly to the US with a rules-based approach. The European Securities and Markets Authority (ESMA) creates regulatory technical standards (RTS) that detail compliance expectations with deadlines, whilst the UK typically adopts a principles-based approach that enables firms to prepare for T+1 in their own way, so long as they are compliant with the settlement deadlines come October 2027.
Regardless of whether or not there are strict steps to follow, Douglas stressed that it is important to start preparing as soon as possible. This will help avoid an expensive, last-minute scramble. As of three months after the US go-live in 2024, “the firms that didn't automate, predominantly the asset managers according to surveys conducted at the time, had seen an average of between 16 and 18% increase in their back office costs as their only solution was to body shop resources to do the tasks manually.”
Overall readiness is high, but this is a team sport
T+1 committees in both the UK and Europe have also been regularly surveying the industry on their readiness for accelerated settlement.
The UK taskforce had “great engagement” with the Q2 readiness survey. 83% of firms reported that they had engaged with T+1 in some way, from simply having read the taskforce report all the way up to being fully compliant. Preparedness in Europe is progressing similarly, with 83% actively preparing for T+1 and 58% reporting they already have a formal implementation plan as of June 2026.
However, the level of engagement varies by industry. “When you sectioned out the asset management community that engagement statistic fell to 57%” Douglas said.
“There is a lag in the buy-side community, possibly because the buy-side community has tended to outsource a lot of back office work, to their broker, global custodian, or a third-party service provider.”
This discrepancy in preparedness is the same in Europe, with the EU T+1 Industry Readiness Committee reporting: “Large infrastructures, custodians and major intermediaries are generally well advanced. Asset managers, pension funds and smaller firms continue to lag, and in some cases implementation plans are not expected to be finalised until the first quarter of 2027.”
And when it comes to preparedness, it’s not just your own affairs you need to pay attention to. Douglas stressed that:
“The chain that results in settlement is only as strong as the weakest link. It is important for firms to focus on not only their own preparedness but the preparedness of their counterparties, of the people to whom they have outsourced activity, or the people from whom they are purchasing services. It's only by converting that into a seamless chain that you will end up with efficient and effective T+1 settlement.”
This was echoed in the message given by ESMA in its July 2026 update:
“No one can be ready in isolation. Assessing your own readiness is not enough: you should check the readiness of your entire ecosystem, up and down the trading and settlement chain, i.e. clients, brokers, custodians, CSD participants, CSDs, CCPs, trading venues, vendors and outsourcing providers. This will allow your firm to start testing as soon as possible, to identify defects early and reduce the risk of disruption at go-live.”
Firms are looking at T+1 in isolation - and missing out
T+1 is, at its core, about improving the resilience and efficiency of financial markets. It’s a much broader goal than simply ‘settle faster’, and Douglas believes that firms need to think more holistically about the shift.
“My fear is firms look at T+1 as a standalone activity; ‘Let's just do enough to get over the line on T+1.”
Having spent 40 years in Ops, he knows the pattern well: there are lots of priorities competing for attention, so teams often resort to doing the minimum required and at the last possible minute. It gets the issue off their plate so they can move onto fighting the next fire. But he believes this is a mistake.
“The message that we gave out very early on was: you've got two and a half years to prepare for this. Think about this as a strategic rather than a tactical solution.”
Douglas is now part of the SteerCo of the UK Digital Champion Taskforce as well, and says that T+1 is vital in realising a hybrid finance market where traditional assets sit alongside decentralised instruments. “Digitalisation is all about automation,” he explained. “It's about use of technology to support your processes. At the end of the day, do you want to invest for the future or do you want to invest only for today?”
“When I say treat T+1 as a strategic project, what I'm actually saying to folks is think about how you futureproof your systems. You will need to automate. So why not use T+1 as an experiment in how you would better automate your back office, because it's not going to be very long before we have a digital market.”
Of course, it’s easy to say that you should launch a strategic project around increasing efficiency. But, as Douglas can attest from his own career, getting the resources to achieve such an endeavour is difficult. In fact, he said that budget would be the biggest blocker for firms looking to get T+1 compliant.
“There has been some research which suggests, depending on the size of the firm and the complexity of their systems, T+1 could cost anything from £250,000 up to £6 million to make the necessary changes in the back office.”
It goes beyond just money, however.
“The blocker is going to be availability of resources: time is a resource, people are a resource, and cash is a resource.”
However, you have one advantage here: increased efficiency and automation for T+1 has a regulatory mandate behind it, which makes it a compelling proposition for leadership.
“I know from my own experience that if you've got a regulatory mandate to comply, that usually commands attention from the seniors in any firm,” Douglas said. “Nobody wants to invite regulatory scrutiny into their firms through a compliance failure.”
Three penalties for failing to settle on T+1
On first glance, it seems like there’s only one penalty for failed settlement: the standard fine from CREST, the UK’s CSD. But Douglas believes there are three in total.
The second is the reputational penalty. “Folks have said to me all through this project, ‘How do I find out the names of organisations that are compliant? Because I think I'm compliant and I only want to work with those people because by definition it'll be more efficient’”. As mentioned before, T+1 relies on every member in the chain performing efficiently. Being the weak link isn’t a desirable position.
“I know of at least one large asset manager who has just sent out a questionnaire to all of its counterparties asking them how prepared they are and for some proof of preparedness,” Douglas revealed. “There is a ground-up feeling that efficiency is important.”
And the third penalty is the unwritten, but very real, likelihood of inviting regulatory scrutiny should a firm consistently fail to meet settlement deadlines. The UK CSDR regulations will be updated to say that, from 11th October, T+1 settlement is the mandated market standard. Unlike the US, there’s no financial penalty from a regulatory standpoint, but the FCA has an operational mandate to ensure the stability and integrity of the UK financial services markets and timely settlement is a key part of this.
“If you have wholesale failure, that presents a threat to the stability and the competitiveness of UK markets, both of which are goals of the regulatory community,” Douglas said.
“I don't know of any firm that would want to actively solicit regulatory scrutiny for these reasons.”
The UK FCA has made it clear that this will happen, stating recently that “preparedness for the T+1 move is essential. If we see participants are not adequately prepared, we may take action.”
UK to publish regular settlement rate figures: What this means for Ops managers
CREST already publishes the percentage of settlement instructions that are received by the close of the settlement window on T+1 and T+2. 86.87% of instructions are already received according to the T+1 deadline.
The UK Accelerated Settlement Taskforce plans to set a target settlement rate, which will be the rolling average of the previous three months’ settlement rates. These targets will be published monthly, starting in January 2027, giving Ops leaders a clear indicator of where they stand compared to where the market actually is.
“If I'm an Ops manager, I can look at that and say, ‘Am I above the 3 month rolling average or am I below? And if I'm below, why? Is it because it's specific instruments that I don't have expertise in? Is it specific counterparties?’ Both of those conclusions give you the ability to think about what you need to do to get your efficiency up, and greater efficiency equals cheaper costs.”
It provides a very public benchmark of operational efficiency. You probably already know your own settlement rates, but previously it has been difficult to compare these to the wider market.
“If you can't measure it, you can't manage it,” Douglas said. “I think this will be a significant step forward in market efficiency and helping firms to become more efficient.”
Settlement rates as compared to the average could become a key performance indicator for your Operations function, or an important differentiator for your firm.
“It's entirely down to firms how they choose to use this information,” Douglas said.
“If it were me and I had decent stats, I'd be using them in my sales pitches all the time. I think the more creative and forwardlooking organisations will be able to use that information to their own advantage.”
Importance of data quality as firms prepare for T+1 settlement
So, identifying the causes of settlement fails is going to be important. What role does data quality play in enabling you to do that? “I think it will be critical,” Douglas said.
“The successful organisations will be the organisations that use the data that is available.”
This data quality and transparency is important not just so you can understand your settlement rates yourself, but because explainability is important externally, too. As mentioned before, it may not just be you that is paying attention to your settlement rates, but also your counterparties.
And regulators have made it clear that, if your settlement rates are lacking, they will want an explanation. The FCA said: “We expect to receive settlement data from Euroclear UK and International (EUI) soon, which will allow us to pinpoint participants with particularly poor settlement performance. If this applies to your firm, we’ll expect you to explain the factors behind it and the actions you are taking to improve settlement efficiency.”
Without the data to provide those signals, providing a satisfactory response to a regulator’s questions will be difficult.
Conclusion
There’s just over a year to go until the UK, Europe and Switzerland move to T+1 settlement. Regulators are watching proceedings carefully, regardless of whether they have been prescriptive or principled in their demands.
This is a whole industry move, so you can expect scrutiny to come not just from your own leadership, but your counterparties too. Compliance isn’t just an internal thing, but something that affects the market as a whole. Done right, T+1 settlement can become a competitive advantage for you. Fail to keep up, and it’ll damage your standing with counterparties and invite attention from the regulators.
What if you’re one of the firms who is just getting started with their T+1 preparations? “I would look at my instruction rates,” Douglas advised. “If I'm not meeting the deadline, do some research into why that is the case and where my breaks are. Is it a specific asset class? Is it a specific group of counterparties?”
“As the time shrinks, you need to focus on where you get the biggest bang for your buck. Successful settlement on T+1 cannot occur unless you create accurate and timely instructions. I would focus on that, theoretically, small percentage of transactions that you are on average not submitting by that deadline. What are the reasons for that? Work on that as your priority for the next year.”
The demands are high, but as Douglas outlined, T+1 represents a golden opportunity to push for improving general operational efficiency. The regulatory nature is a strong compelling event, and setting yourself up for success now puts you in a strong position as markets continue to evolve in future.
Regardless of whether you are opportunistic or pragmatic when it comes to T+1, Douglas stresses the need to prepare as soon as possible.
“It's not too late to start but it soon will be - the reality is you now have little time left to prepare.”