On 28 March 2024, there was published the Accelerated Settlement Taskforce’s report. The Taskforce was established as part of the Edinburgh Reforms and at its broadest its Terms of Reference ask what the case is for the UK moving to an accelerated settlement cycle such as T+1 and over the longer term to T+0 and eventually to atomic settlement.

In the report the Taskforce notes that it has become clear that the question it should address is how the UK should move to T+1 rather than whether it should do so. This is in light of the US Securities and Exchange Commission announcing its move to T+1 with effect from 28 May 2024 which followed the earlier move to T+1 in India and China’s operation of T+0 for many years. Also, in October 2023, the European Securities and Markets Authority published a call for evidence on shortening the settlement cycle in the EU and it is expected to report in Q3 2024. As a consequence, the Taskforce has set itself the task of identifying the challenges and risks of a move to T+1, how they could be mitigated and the timescale and phasing of any move. These topics are further discussed in the report.

As regards challenges and risks the report notes that a move to T+1 would impact almost every department of fund managers, brokers and custodians from front office trading to back-office processing. It will inevitably trigger significant investments into greater automation and standardisation of core back office and post trade processes which would have a material market benefit. Accordingly in the report the Taskforce identifies a number of operational and behavioural changes that should proceed in advance of the move to T+1.

The Taskforce also notes the need for continuing engagement with stakeholders on the issues that will arise during the transition. The opportunity to learn from the US move to T+1 in May 2024 is particularly important and the consequences of misalignment with the EU and the possible mitigations that can be put in place should this occur are identified in the report. A key recommendation of the report is therefore establishment of a Technical Group to look at the operational issues that will need to be resolved and to help agree market standards to ensure a smooth transition.

The government has published its response to the report and agrees with all its recommendations. In particular, the government agrees that the UK should move to T+1. The report recommends that the UK should aim to move to T+1 no later than the end of 2027. The government fully endorses this: this timeline acknowledges the need for firms to have sufficient time to prepare for the transition to T+1 while ensuring momentum is maintained for this important project. The government is also establishing a Technical Group to take forward the implementation of the UK move to T+1.