Jon Ford

Jon Ford

Head of Fixed Income Business Development, Pirum

 

As we help our clients prepare for T+1, I'm always struck by how different the Fixed Income Securities Finance and Repo challenge is from what the US faced (and broadly speaking what the Equity SFT market faces). My guests and I detailed this in our Industry-led T+1 Fixed Income webinar episode, where I hosted industry experts from BNP Paribas, ICMA, and J.P. Morgan. But any European T+1 review is quick to highlight this fact. It is a bigger and more complex challenge.

The funding market gap

The fundamental difference? As Scott Schroenn from BNP Paribas explained: "Treasuries [were] already on T+1 going back to 2017. So, they had a funding market already in place, well in advance of this that was well established, very liquid. We don't have that in Europe."

When T+3 went to T+2, screen liquidity on Repos stayed at T+2. Now we're asking the funding market to compress by a full day without the preparatory infrastructure.

The numbers

Our internal data at Pirum shows 80% of European Repo in euro currently settles T+2, while sterling and dollar Repo largely settles T+1 or T+0.

But ERCC work suggests that at least 25% of the European market could move to T+0 settlement. That's up from around 5% today – a five-fold increase for a $3 trillion daily industry.

Scott put the challenge in context and got straight to the heart of the matter: “you have to find additional sources of liquidity." The compressed cycles will put pressure on settlements, which will in turn put pressure on liquidity (intra-day and overall).

The additional impact? Credit line pressure, concentration risk, higher HQLA requirements, and stress on netting.

The automation reality check

From my perspective, working on automation within the SFT space, there's a fairly decent understanding that Fixed Income is slightly behind the equity markets and is trying to catch up.

But here's what the US experience tells us: 48% of firms still have ongoing project costs 18+ months after go-live, and FTE costs related to T+1 are up around 20%. That's what happens when you solve with headcount instead of automation.

Considering Europe's fragmented infrastructure, that's not a workable nor scalable solution.

Your counterparties need to be ready too

Rickie Smith from J.P. Morgan made the critical point: "J.P. Morgan can get itself ready as best they can. But if the other players within that transaction are not at the same pace or at the same level, then you're still going to have manual steps, manual processes, and it's just not going to lead to a more successful outcome."

As Rickie described their timeline: "[2025] was making sure we knew what the impact was. [2026] is going to be full on with executing against that investment spend. And then hitting into the start of 2027 when we start to test all of that functionality."

The 28% problem

I cited Firebrand research in the webinar showing 28% of firms polled had not even started preparing for T+1 by mid-2025.

We're in Q1 2026 now. October 2027 is 20 months away. As I mentioned, the industry quote goes: "2025 is a year for planning, 2026 is a year of execution.” So, if you haven't completed impact assessments and secured 2026 budget, you're behind.

What success looks like

Scott outlined the framework: "[The] minimum requirement is settlement efficiency. But real success is how we make sure that we are improving industry as a whole."

Alex Westphal from ICMA added: "T+1 itself doesn't really solve any of our issues and certainly doesn't get us to a more integrated market, but it certainly creates a focus and momentum to make progress on all of these fronts."

The goal is using T+1 as a catalyst for genuine post-trade efficiency improvements, not just compliance.

What you should do now

Immediate priorities:

  • Map end-to-end processes to identify manual touchpoints
  • Survey your top counterparties on their readiness
  • Engage with ICMA and ISLA working groups (and know their recommendations)
  • Invest in real-time inventory management
  • Automate recalls, returns, and affirmation workflows

At the risk of repeating myself, and as I said during the webinar: "If you've got problems today, they're not getting better under T+1. So, start preparing, start executing."

T+1 Fixed Income readiness checklist

If you're thinking about T+1 preparation for your Fixed Income or Repo desk –whether it's automation solutions, counterparty coordination, or understanding what's actually required by the European and US regulators – let's talk. We are also preparing a Fixed Income T+1 readiness checklist. If you want to gauge your readiness and what still needs to be done, let us know. Contact us here.

Watch the full discussion: Industry led T+1 webinars