On 23 October 2025, the Financial Conduct Authority (FCA) issued a Dear Compliance Officer letter to those firms within its Asset Management and Alternative Firms portfolio. The letter sets out the FCA’s expectations ahead of the market transition from a T+2 to a T+1 securities settlement cycle on 11 October 2027.

Background

The Government has confirmed that it plans to legislate to bring T+1 into effect. From 11 October 2027, all transferable securities traded on a UK trading venue and settled on a UK central securities depository (unless exempted) will be required to settle on a T+1 basis.

In February 2025, the industry-led Accelerated Settlement Task Force (AST) published its report setting out a UK implementation plan for the first day of trading for T+1 settlement. The report set out recommendations and actions for all firms.

Key message

The FCA expects all firms to be planning and preparing now to support the transition to T+1 settlement.

The FCA sets out its expectations in the letter. This includes that by the end of this year it expects all firms to familiarise themselves with the recommendations in the AST report and put in place a project plan to move to T+1 settlement by October 2027. This includes identifying the changes that need to be made by the firm and securing the necessary funding and budget to implement those changes.

The FCA also highlights the joint recommendation from the Investment Association, Personal Investment Management and Financial Advice Association and Alternative Investment Management Association encouraging firms to voluntarily alter their fund settlement timings to T+2 on or before 11 October 2027. The regulator adds that this mirrors the recommendation in the AST report where T+2 was identified as optimal for fund settlement, to provide cash management flexibility whilst minimising a potential funding gap with products settling at T+1.

Ongoing supervision

The FCA states that it will continue to engage with firms on their T+1 plans as part of its ongoing supervision and where necessary it may ask firms to describe their implementation plans before the deadline.