Analysis, Markets

UK T+1 taskforce squares off over Easter 2026 kickoff

By Ellesheva Kissin
UK T+1
Image via Getty

A City taskforce assigned by the Treasury to decide whether to slash the UK’s trade settlement time is at loggerheads – just weeks before a year-end deadline to recommend a course of action.

The Accelerated Settlement Taskforce is advising on cutting settlement time for equities and corporate bonds from two days post-trade to just one, in a move known as T+1.

Banking Risk and Regulation, in collaboration with The Financial Times, understands from four sources that the Easter 2026 T+1 go-live date is still being wrangled over.

The tension stems from disagreements over whether to follow the US, which is racing towards a T+1 May 2024 deadline, or to align more closely with the European Union, which is moving more slowly.

The Easter 2026 date is still in the taskforce’s draft text for now but a source says there is a possibility it won’t make the final report. Disagreements between stakeholders have intensified to such a degree that consensus on a go-live date has not been reached less than three weeks before the report is due to be published.

The dissenting parties include the “big broker-dealer banks, capital markets players and the big institutional investors that treat the UK and EU as one market,” one source says.

“It comes down to what your business model [is],” says another taskforce member, namely whether a firm has more US or European interests.

Members of the taskforce include trade associations UK Finance and the Investors Association, plus custodians, brokers and large asset managers. 

Operational bugs and costs may underpin UK T+1 delays

Under the move, firms would have to confirm and allocate trades on trade date, known as T+0, ready to be settled the following day. Banks’ operations teams have already cited concerns over not being given proper resources to make the overhaul.

Shorter settlement times boost efficiency and reduce time lag risk, but are a heavy lift for firms that lack fully automated settlement processes.

Some on the taskforce argue that the Easter 2026 date does not leave enough time for firms with fewer resources to prepare their back office systems for the extensive overhaul.

But the EU argument may be a cover for firms with operational and cost concerns to buy themselves more time. 

Kate Dawson, a director at KPMG, says: “Some firms may be thinking well, if we can push it [the implementation date] out a bit so it is in line with the EU, we’ve got a bit more time to spread the costs, and maybe we can get more cost efficiencies.”

“They’ve already had to do the US [transition], probably a bit quicker than the industry wanted to – they wanted to wait till September next year – but the SEC came out with May next year,” she adds.

“I’m not necessarily sure it’s a real ideological thing. I would say a lot of it is about costs and efficiencies.”

If Easter 2026 is rejected, the implementation date could be pushed back to 2027, or by as much as five years, which would tie in with the EU’s timeline.

The EU’s securities regulator is still mulling whether to make the move to T+1 at all, though it is widely expected to do so.

UK T+1 taskforce delays highlight sluggish Edinburgh Reforms 

The T+1 taskforce was set up exactly a year ago as part of the Edinburgh Reforms, a set of plans from the UK government to boost its capital markets after damage wrought by Brexit.

But the Treasury Committee said earlier this week that it was disappointed by slow progress on the wider measures: chair Harriett Baldwin called them a “damp squib”. 

But KPMG’s Dawson says that though the government had political reasons to promote big changes, “the reality is it was always going to take longer; it was never going to be a big bang”.

“For the UK to be attractive, it needs to have a stable, thoughtful regulation. So it’s a balance between [getting] things in quickly to make things more efficient, but if you do it too quickly, and you don’t consult properly and you forget that this part of the market is going to be affected, then that isn’t good, either.”

Resource-strained Treasury asked sector players for T+1 help

The Treasury has taken a “low profile” in the T+1 debate so far. 

It gave “a clear steer that competitiveness and being viewed as a more structurally efficient market is important” but that was only at the start, said one source. The Treasury wants the industry to decide, according to another source, before becoming more involved in the next stages.

A Treasury spokesperson said: “The Accelerated Settlement Taskforce is independent and was tasked by the chancellor to provide recommendations about how to speed up the settlement process.” 

Under the Edinburgh Reforms, the Treasury has set itself a lengthy ‘to-do’ list, Dawson says, and is increasingly leaning on industry involvement to help get projects over the line.

“Literally – they don’t have the number of people in Treasury to actually get [through all the work],” she adds. 

“Partly they want to be more engaged with the industry, and that’s a good thing, but it’s also just literally resources – the ability for them to get through all this regulatory change that’s been pushed their way.”

Others on the taskforce insist there were no issues with the Treasury. 

But the appointment of a new City minister, Bim Afolami, a former corporate lawyer at Freshfield Bruckhaus Derringer and HSBC executive, and the increasingly real possibility of an upcoming general election, could significantly reshape political will for the T+1 project.

The T+1 taskforce must put out an interim report before the end of the month, as well as a final report by December 2024. 

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