FCA Backs T+1 Settlement Push as December Deadline Looms

The Financial Conduct Authority welcomed the Accelerated Settlement Taskforce’s latest report today. Jamie Bell, the FCA’s head of capital markets, said the progress toward T+1 settlement cycles marks “a major milestone in our drive to support growth and innovation.” The report shows significant strides made over the past year.

Bell thinks faster settlement will cut risks and free up capital for quicker reinvestment. The shift puts the UK in line with other major markets that have already made the jump. Market participants face a December deadline to update their systems and processes. Testing of these changes should be underway by now, according to the FCA. The regulator stressed that a smooth transition is crucial for market integrity.

Not exactly a walk in the park.

The AST report outlines what got done last year and what’s left to tackle. Bell said he’s “delighted to see the great progress made last year” but the focus stays on completing necessary updates by year-end. The pressure’s building as firms scramble to meet technological requirements. System upgrades and thorough testing phases top the to-do list for most market players.

Several major banks, including Barclays and HSBC, reported significant progress in their system upgrades. These institutions are actively participating in industry-wide testing phases to ensure they’re ready. Their involvement shows the collective effort needed to pull off a seamless transition to T+1 settlement cycles. But it’s unclear if smaller firms can keep pace with the big players.

The transition represents a big step for capital markets. Operational efficiencies should improve and counterparty risks should drop. The full benefits depend on whether the market’s actually ready for change, though. And that’s still pretty much up in the air.

The U.S. markets successfully moved to T+1 in 2024, giving the UK a benchmark to follow. The U.S. transition showed both potential benefits and pitfalls that UK regulators want to learn from. Market experts are watching closely to see how firms adapt to the new T+1 framework.

The Accelerated Settlement Taskforce, led by industry veteran Laura Jenkins, has been key in guiding the process. Jenkins noted that the taskforce engaged in extensive consultations with key stakeholders since the start of 2025. These discussions addressed potential challenges and aimed for a coordinated approach to the T+1 shift. The collaborative work between regulatory bodies and market participants seems essential for success.

A meeting is scheduled for February 15 between the FCA and major financial institutions. They’ll review progress and discuss any remaining obstacles that could derail the timeline. The FCA will provide updates on regulatory adjustments needed to accommodate the new settlement schedule. The regulator hasn’t provided further specifics at this stage but stressed the importance of ongoing updates.

Market entities must work toward meeting these expectations as the year moves forward. There’s mounting pressure to ensure technological readiness across the board. The switch to T+1 demands coordinated efforts throughout the industry, from the biggest banks down to smaller trading firms. Some worry about whether everyone can actually pull it off.

The T+1 settlement cycle aims to reduce the time between trade execution and settlement to just one day. The change is part of the UK’s broader strategy to boost market efficiency and competitiveness in global markets. The FCA has been working closely with the Accelerated Settlement Taskforce to make sure all market participants are aligned with the objective. The taskforce’s report serves as a critical update on these efforts.

Pending tasks include more system upgrades and rigorous testing phases. The process involves significant collaboration across different stakeholders who don’t always see eye to eye on implementation details. The AST has set a path, but execution requires collective action from firms that compete with each other daily.

Industry experts are keenly watching how firms will adapt to the new framework. The shift requires major technological upgrades and operational adjustments that cost serious money. Bell, representing the FCA, has repeatedly stressed the importance of maintaining market stability throughout the transition period. The regulator’s role in overseeing the change shows its commitment to fostering a resilient financial ecosystem.

The FCA didn’t provide additional comments beyond Bell’s statements. The industry awaits more disclosures on upcoming phases and specific implementation guidelines. A full transition deadline remains set for the end of the year, but details on the exact timeline are still emerging. Market readiness measures continue under close scrutiny from regulators.

Further testing and refinement of processes represent the immediate next steps. Ensuring a seamless shift to T+1 is the priority as December approaches fast.

The European Securities and Markets Authority has been monitoring the UK’s T+1 preparations closely, particularly given the interconnected nature of cross-border trading. ESMA officials expressed concerns about potential settlement mismatches between UK markets operating on T+1 and EU markets still on T+2 cycles. Cross-border transactions could face complications if timing isn’t properly coordinated between jurisdictions.

Canada also completed its T+1 transition alongside the United States, creating a North American settlement bloc that processed over $2.8 trillion in daily trading volume during the first quarter. The combined move by these markets has put additional pressure on other financial centers to accelerate their own timelines. Some Asian markets, including Hong Kong and Singapore, are now considering expedited T+1 implementation to avoid being left behind in settlement efficiency.