04 Jan 2024
T+1 is coming to the UK! Says the Accelerated Settlement Task Force
As expected, it’s no longer an if, it’s a when T+1 will become a reality in the UK, according to Charlie Geffen, Chair of HM Treasury’s Accelerated Settlement Taskforce.
The Chair has written a letter to key industry stakeholders, setting out the Task Force’s position on T+1. Geffen noted that the conversation has now moved to how and when the UK should transition to the shortened settlement cycle.
Although the industry remains undecided on exact timing – whether to minimise mis-alignment with North America’s effective date, or wait for Europe to set its timeline – according to Geffen, there was broad consensus that “T+1 would be the catalyst for the industry to invest in automation and to update systems and processes.”
We at Pirum agree. The move will no doubt cause short-term challenges for participants with outdated systems (however, if this is you – we have the solution), but the long-term benefits of operating in a T+1 environment make it a no-brainer: increased market liquidity, reduced credit, market and liquidity risk, lower costs from better operational efficiency, and reduced financial resource usage, to name a few.
Whilst helping clients in North America implement T+1 readiness, the message we’ve heard repeatedly is the need for a global solution and, thankfully, the technology already exists! Real-time connectivity, harmonised data, straight through processing (STP) and intelligent automation – the building blocks of securities finance – have already been implemented. Now it’s just a matter of adoption. So why wouldn’t more participants follow this lead?
In a few years our industry will likely look back and ask itself how we could ever have worked on a T+2 basis, just like today T+3 feels like ancient history. The benefits of intraday will simply be plain to see and T+1 (perhaps even T+0) will become a core building block of not just fintech, but capital markets in general.
With our post-trade solution, Pirum is primed to assist clients in this move. If you have any questions about T+1 or if it raises any issues at all for your role, desk or company, get in touch. We’ve got T+1 covered, all the way down to near-real time.