UK to Implement T+1 Settlement by 2027

UK to Implement T+1 Settlement by 2027

Posted on March 28, 2024 by Cathy Wright

 

Today, saw the publication of the long-awaited UK Accelerated Settlement Taskforce report written by Charlie Geffen. ISITC Europe supports the report and its conclusions, which recommends that the UK implement T+1 settlement by 2027

We also support the wish to collaborate with the EU to where possible, to coordinate the T+1 implementation date and to utilize any common denominator regulations or systems that can bring an orderly transition.

We also urge the UK to work with any other international market on coordinating T+1 required changes, to ensure international standards are met and to attract increased investors and Issuers.

ISITC Europe believes the timescale for T+1 allows firms to budget for incremental upgrades of systems processes and educating employees to work in real-time.

ISITC Europe has always supported innovation and development in the capital markets for the benefit of investors and Issuers. However, these should not be at the expense of  increased cost and risk for transacting in the UK capital markets

ISITC Europe supports the report in that where it is necessary a regulatory mandate should be introduced. Specifically, around the electronic confirmation of settlement details and the matching of transactions. This should be as close to the time of transaction time as possible and should be mandated industry wide.

However, not only should processing speeds be mandated, but also the timely use of batches, i.e., daily multiple batches sent to the CSD or settlement agents, or an increase the use of real-time processing with modern technologies.

Business areas impacted such as Stock Lending/Borrowing will face their own challenges and ISITC Europe urges lenders to take part in the technical Task Force chaired by Andrew Douglas.

The need to test and ensure market resilience is a primary objective of all capital market players. Digital Operational Resilience Act (DORA) came into force in January 2023 with a 2 year implementation period, compliance should now be measured against the T+1 processing needs. Cyber-attacks and fraud must be protected against, in real-time with detection prevention and recovery, independently tested regularly.

ISITC Europe is aware of the significant operational and business challenges ahead to make T+1 successful and will continue to measure success by the positive impact on investors and Issuers.

We urge all our members to begin T+1 analysis today and focus on areas where you need to budget for change.