About the Taskforce
The UK Accelerated Settlement Taskforce was set up in December 2022 to examine the case for the securities settlement cycle to be shortened from its current standard of Trade Date plus 2 days, or ‘T+2’, to Trade Date plus 1 day or ‘T+1’.
The initial report, published in March 2024, recommended that the UK should commit to moving to a T+1 standard settlement cycle at the latest by the end of 2027.
It was recognised that a number of technical and operational changes would be necessary for the UK to be ready to move to T+1 and so the report also recommended that a new group – the Technical Group – be set up to determine the details of these necessary technical changes.
The report recommended that this group should select a specific date before the end of 2027 for the UK to transition to T+1.
The report recommended, that irrespective of the migration date to T+1, appropriate operational changes, such as market standards for allocations and confirmations and electronic processes for exchanging SSIs, should be mandated with effect from a date in 2025 to help prepare for T+1.
The report also suggested that the UK should engage with other European jurisdictions to see if it is practical to align similar moves to T+1 as well as taking account of the impact of the move to T+1 by North American markets (USA, Canada and Mexico) in May of 2024.
The UK government accepted all of the recommendations made in the “Accelerated Settlement Taskforce Report” and subsequently established the Accelerated Settlement Technical Group to carry out the next phase of the work.
The government asked the Technical Group to produce a report with its findings and recommendations by the end of 2024. The interim report was published in September with the final report expected in January 2025.
These recommendations may include actions for government, the UK financial services regulators and industry participants.
The work of TGT was structured into five workstreams with issue-specific sub-streams as shown below:
The UK government accepted all of the recommendations made in the “Accelerated Settlement Taskforce Report” and subsequently established the Accelerated Settlement Technical Group to carry out the next phase of the work.
The government asked the Technical Group to produce a report with its findings and recommendations by the end of 2024. These recommendations may include actions for government, the UK financial services regulators and industry participants.
The work of TGT was structured into five workstreams with issue-specific sub-streams as shown below:
The full membership of the TGT led by Andrew Douglas can be viewed here.
To achieve a successful settlement in such a reduced timeframe, there are several considerations on which market participants will need to carefully consider.
- Automation: Relying on the expediency of adding manual resource should not be considered anything other than a short-term work around whilst automated solutions are developed. The sooner you automate or outsource to automated partners, the sooner T+1 benefits such as your improved reaction time to market events, reduction in your capital/collateral costs and reduction in your counterparty risk will be realised and the more likely your firm will be able to successfully and efficiently settle within a T+1 timeframe. It is interesting to note that recent reviews of the US T+1 implementation suggest that insufficient focus was given to automation leading to firms post implementation having to deal with increased volumes of manual processing and exception management.
- Post-trade Code of Conduct: The collective experience of TGT members suggests that compliance with market practice can in some cases be considered ‘optional’. To maximise the operational benefit to the UK market and all of its participants, we believe that compliance with the final recommendations should not be optional. The intention, therefore, is that the final version of the recommendations will constitute a ‘Post-trade Code of Conduct’ to which all UK market participants will be expected to adhere. To assist in achieving this goal, we have asked the UK regulatory authorities to consider using them as part of their supervisory engagement with market participants to, for example, ask firms how they have adopted the Post-trade Code of Conduct and if they have not, to explain their rationale for non-adoption. It is our view that adherence will enable market participants to meet their wider legislative and regulatory T+1 obligations and ensure maximum operational efficiency is achieved in UK settlement processing post T+1 implementation.
The diversity of stakeholders involved in this process was deliberate and necessary given how extensive the impact of a move to T+1 will be. A smooth transition to T+1 in the UK, as it does in all jurisdictions, hinges on all market participants understanding and agreeing on what actions they need to carry out and by when.
Between January and July of 2024, multiple workshops were arranged and attended, and the interim recommendations were defined by the collective efforts of 450+ SMEs from 100+ participant entities.
- 95 firms representing trading, clearing and settlement venues, custodians, registrars, investment managers, brokers, legal firms, consultancies and numerous intermediaries from the UK market
- 9 UK focused Industry Associations: AFME, Financial Markets Standards Board, GFMA GFXD, IA, ICMA, ISLA, ISITC Europe, PIMFA and UK Finance
- Observers from all UK financial regulatory bodies: HMT, Bank of England, PRA and FCA
- Observers from key European Union participant constituencies: EACH, ECSDA and EFAMA