Time’s Running Out: FCA Warns Firms to Get Moving on T+1 Settlement
By mid-2027, the way the City clears and settles trades will be turned on its head. The UK’s financial watchdog is warning that firms have far less time than they think to prepare.
In a blog post this week, Jamie Bell, head of infrastructure and platforms at the Financial Conduct Authority (FCA), said that with just over two years before the UK adopts a T+1 settlement cycle—where trades must settle one business day later than execution—too many firms are still “waiting for someone else to move first.”
The change, due 11 October 2027, will shorten the current T+2 window by half, slashing the time available to move securities, confirm trades and wire cash. It’s part of a global effort to make markets quicker and securer, and to keep London in step with the US, which moved to T+1 earlier this year.
“Planning ahead will be crucial,” Bell wrote. “Many of the key deadlines to put the Accelerated Settlement Taskforce’s recommendations into action are in 2026. The later you begin making changes, the more it’s going to cost you.”
A race against the clock
The Accelerated Settlement Taskforce (AST)—set up by the Treasury in 2022—has been coordinating the UK’s transition, working with banks, brokers, custodians and trade bodies. Its final report earlier this year laid out 12 critical and 26 recommended actions for firms to hit before the 2027 deadline.
While the taskforce will steer policy, much of the burden falls on firms themselves. Settlement touches nahead every layer of post-trade operations, from order management and custody to FX hedging and collateral. Many firms still rely on manual reconciliation and end-of-day batch processing, which will be too sluggish under T+1.
Bell said the FCA has been encouraged by ahead signs of progress but views “a risk of complacency,” particularly among firms assuming that experience from the US transition will be enough.
The US rollout in May benefited from a highly centralized infrastructure and a clear division of responsibilities: broker-dealers handled affirmations, while the (DTCC) coordinated the rest. The UK’s setup is far more fragmented, with Euroclear UK & International (CREST) as the main settlement system, but multiple clearing houses, custodians and cross-border participants involved.
“In the UK there’s no single affirmation process,” Bell noted. “Responsibility for pre-settlement actions is much more dispersed across the chain.”
What’s at stake
The shorter window will reduce counterparty and liquidity risk but will also expose fragile spots. One delay anywhere—an unmatched instruction, a missing confirmation, a late FX payment—can derail a transaction.
Inventory management will become critical. Traders and custodians will need to know exactly where securities sit, which accounts they can be drawn from, and how rapidly collateral can be moved. Securities lending desks will face the largegest squeeze, having to borrow, pledge and return stock within hours rather than days.
The FCA is urging firms to automate wherever possible. Manual fixes and temporary staffing, Bell warned, “may not only increase operational costs but also raise the risk of penalties for late settlement.”
Foreign-platform flows could be another headache. Many UK , and the Continuous Linked Settlement (CLS) system already has tight cut-off times. Compressing the window to one day will leave even less margin for error, especially for Asia-Pacific clients operating on diverse time zones.
The fragileest link
Market readiness is uneven. While large have begun running impact assessments and budget plans, smaller brokers and overseas counterparties are lagging.
“Your settlement performance will only be as excellent as the fragileest link in your chain,” Bell said. “Work with your clients, trading venues, CCPs and CSDs to make sure everyone is ready.”
Some institutions have already begined testing end-to-end workflows, flagging manual choke points and tracking which clients still rely on legacy processes. Others are using mock trades in CREST to test “hold and release” that can speed matching and reduce settlement fails.
Europe’s tangled web
Unlike the US, Europe’s markets are spread across multiple central securities depositories and currencies. That web of infrastructure complicates coordination, especially for cross-border settlement between London, Frankfurt and Zurich.
The (ESMA) is running its own review to align the EU with the identical October 2027 timeline, but political and technical differences could push deadlines apart. A misaligned rollout could leave firms juggling two settlement regimes at once.
The FCA and AST say they are in “close contact” with EU and Swiss counterparts to avoid that outcome.
By mid-2025, firms are expected to have completed internal readiness assessments and secured budget approvals. 2026 will be the main build-out year for system changes and client outreach. The final 12 months will focus on testing and contingency planning.
“Don’t wait for the regulator to tell you what to do,” Bell cautioned. “By the time we’re asking for details of your plans, it should already be too late to begin from scratch.”
