What the UK's move to T+1 settlement means for firms

The Financial Conduct Authority warned on 13 August 2026 that its supervision of firms preparing for one-day securities settlement will become "increasingly intrusive" as the deadline approaches. That deadline is 11 October 2027, the date on which the UK intends to shorten the standard settlement cycle for UK cash securities that currently settle two business days after trading (T+2) to one business day (T+1); gilts already settle on T+1, and some transactions are exempt or follow other jurisdictions' cycles, as this article explains below.

The change affects anyone in the UK who trades, clears, settles or administers securities: investment firms, banks, brokers, dealers, asset managers, custodians, central counterparties, registrars, fund administrators and the technology vendors that support them. It compresses the time available to confirm a trade, arrange funding and fix errors from two days to one, which is why the FCA is now asking firms for evidence of systems and process implementation and testing strategies, rather than project plans.

This explainer sets out what changes, what stays the same, which parts of the plan are law and which are industry convention, and how the UK timetable relates to transitions already completed or under way elsewhere.

T+1 in plain English

"T" means the trade date, the day two parties agree a transaction. "T+2" means settlement — the point at which securities and cash actually change hands — must happen no later than two business days after that. "T+1" means the same thing happens no later than one business day after trading. Under both regimes, settling sooner, on the trade date itself (T+0), remains allowed.

Shortening the cycle by one business day matters because it reduces the time a buyer and seller remain exposed to each other before the trade is finally settled. The FCA, the Bank of England and the industry's Accelerated Settlement Taskforce (AST) have cited that reduction in counterparty risk as the rationale for the move, while acknowledging that it compresses the processing and funding windows firms rely on to get trades right.

The legal mechanism: UK CSDR, not a standalone FCA rulebook

It is easy to assume, from shorthand like "FCA T+1 rules", that the regulator writes the legal mandate. It does not. The UK's current T+2 requirement sits in assimilated EU law — Regulation (EU) No 909/2014, known as UK CSDR — carried into UK law after Brexit. HM Treasury's plan is to amend Article 5(2) of UK CSDR through secondary legislation: the draft Central Securities Depositories (Amendment) (Intended Settlement Date) Regulations 2026, published on 20 November 2025 alongside a policy note.

That instrument needs affirmative approval from both Houses of Parliament before it takes legal effect. As of 28 September 2026, official sources describe it as a draft; no made version was located at the time of writing. The 11 October 2027 date is a firm government commitment, confirmed on 19 February 2025, but readers should check legislation.gov.uk or HM Treasury's T+1 pages before relying on the exact wording.

The FCA's role is supervisory: it monitors firms' readiness, gathers settlement performance data and communicates expectations. It does not hold the pen on the statutory settlement deadline.

What's in scope, what's exempt, and what moves by convention

The intended statutory requirement, once made, would apply to transactions in transferable securities executed on a UK trading venue, requiring settlement no later than T+1. Three qualifications matter:

• Existing exemptions carry over, and the draft adds an explicit new one for securities financing transactions — securities lending, borrowing, buy-sell backs, sell-buy backs and repurchase transactions. These can still be arranged for T+0 or T+1 by contract, but the statutory deadline does not compel it.
• A non-UK trading line settling in a non-UK central securities depository follows that jurisdiction's cycle, not the UK one, even for a UK-connected security.
• Gilts already settle on T+1 under existing Bank of England and UK Debt Management Office practice, so the October 2027 change chiefly harmonises the remaining UK cash-securities market — mainly shares traded on a UK venue and settled in CREST, operated by Euroclear UK & International — with a cycle gilts already use.

Separately, the AST recommends that the market move relevant over-the-counter and systematic-internaliser transactions to T+1 by convention, even where UK CSDR imposes no statutory obligation — industry guidance, not law. The government also left out the AST's proposed temporary exemptions for Eurobonds, exchange-traded products and other non-UK bonds, because the UK and EU transitions are expected to align on the same date.

The compressed post-trade timetable

The AST's implementation plan, published 6 February 2025 with 12 critical actions and 26 highly recommended actions, sets out a UK T+1 Code of Conduct with specific timing expectations. These are industry-recommended deadlines, not the statutory cut-off itself.

Firms whose allocation, confirmation and matching processes still rely on manual steps or overnight batch cycles have a narrower window to get a trade agreed and matched before the instruction must reach the CSD.

Operational changes: data, stock loans and FX

Recurring themes in the AST's operational recommendations include:

• Reference data and standing settlement instructions. With less time to correct missing or inaccurate client, counterparty, account, tax or settlement data, the AST calls for firms to hold standard identifiers and settlement instructions electronically, and to increase straight-through processing.
• Stock-loan recalls. Securities sold on trade date must be available to settle the next business day, so buy-side firms may need to start recall processes earlier than under T+2.
• Foreign exchange funding. Cross-border investors may need to arrange currency sooner. The AST calls for firms to review FX trades that settle outside payment-versus-payment mechanisms — arrangements that link the final settlement of one currency leg of an FX trade to the final settlement of the other, so that neither side pays out without receiving the matching currency — because a shorter window leaves less time to manage that risk if something goes wrong.
• Corporate actions. The AST recommends keeping existing buyer-protection deadlines, while noting that timely allocation, confirmation and matching become more important to avoid disputed claims.

Fund units: a separate move to T+2

The FCA supports an industry recommendation that UK authorised funds and recognised schemes investing predominantly in T+1 markets move settlement of transactions in fund units to T+2, also by 11 October 2027. This is not a contradiction of the securities mandate — it concerns a different transaction: the settlement of subscriptions and redemptions in fund units, not the T+1 settlement of the securities the fund holds. It is industry guidance backed by the FCA, not a statutory requirement.

How the FCA will supervise readiness

In its 13 August 2026 blog, the FCA said it expects to receive settlement data from Euroclear UK & International and use it to identify participants with poor settlement performance, and that those firms would be expected to explain the causes and their corrective action. The regulator did not specify, in the material reviewed for this article, when that data flow would begin, how often it would be reported, or whether firm-level findings would be published.

The FCA's central message is that supervision will become "increasingly intrusive" as October 2027 nears, and that it expects clear evidence of systems and process implementation and testing strategies — not project plans or intentions.

UK, EU, Swiss and North American timetables compared

The UK's move is coordinated with, but legally separate from, transitions elsewhere.

North America's completed transition is a source of implementation experience, not the legal basis for the UK change. The UK and EU projects are aligned on the same commencement date but rest on separate legislation in each jurisdiction.

What firms should evidence now

Given the FCA's warning and the AST's timetable, firms are likely to need to evidence progress on: electronic same-day allocation and confirmation (due as a critical action by 31 December 2026), electronic standing settlement instructions and clean reference data, earlier stock-loan recall arrangements, reviewed FX funding arrangements, and their testing strategies for settlement and exception-handling systems, not merely high-level plans.

What to watch next

The implementing statutory instrument had not been made as of 28 September 2026; readers with an operational stake should check legislation.gov.uk and HM Treasury's T+1 collection page for the final text, commencement provision and any changes arising from parliamentary scrutiny. The FCA's T+1 pages and its August 2026 blog remain the primary sources for supervisory expectations and any update on the timing of Euroclear settlement-performance data. The AST's Technical Group report is the fullest published account of the operational Code of Conduct firms are expected to follow.