UK securities settlement will move to T+1 from 11 October 2027, with new exemptions for SFTs and major implications for funding, FX and post-trade operations.
The UK Treasury has published draft legislation to make T+1 the standard securities settlement cycle in the UK from October 11, 2027, aligning with equivalent reforms in the EU, Switzerland and North America.
The policy note, released alongside a draft Statutory Instrument (SI), confirms the government will cut the current T+2 cycle to T+1 for most transactions in transferable securities that are traded on a UK venue and settled in a UK central securities depository (CSD), such as CREST.
The move delivers on recommendations from the industry-led Accelerated Settlement Taskforce (AST), which earlier this year urged the government to legislate for an 11 October 2027 go-live date and set out a package of operational changes for the market to complete ahead of the switch.
Surgical tweak to UK CSDR
The draft Central Securities Depositories (Amendment) (Intended Settlement Date) Regulations 2026 use powers in the Financial Services and Markets Act 2023 to amend Article 5(2) of the UK Central Securities Depositories Regulation (UK CSDR).
Instead of requiring settlement “no later than the second business day” after trading, the amended article will set the intended settlement date as “no later than the first business day after the day on which trading takes place”, explicitly defining that as T+1.
The change applies to transactions in “transferable securities” as defined in UK MiFIR, covering instruments that are negotiable on capital markets, including shares and bonds. The existing scope and structure of UK CSDR otherwise remain unchanged.
Derivatives mostly out of scope, SFTs exempt
The Treasury reiterates most derivatives will sit outside the statutory T+1 requirement, either because they are not classed as transferable securities, are not executed on a UK trading venue, or because related transfers of securities for collateral or physical settlement are not treated as separate transactions for the purposes of Article 5.
Any acceleration of settlement in those markets is expected to emerge through market convention rather than regulation.
The SI preserves existing exemptions where trades are privately negotiated but executed on a venue, are executed bilaterally and reported to a venue, or involve the first transaction in a security being recorded in book-entry form.
However, the government has accepted the AST’s recommendation to carve out securities financing transactions (SFTs) in transferable securities from the T+1 rule, arguing that firms need flexibility in repo and stock lending markets to manage liquidity and collateral. The exemption covers securities and commodities lending and borrowing, buy-sell and sell-buy backs, and repurchase transactions as defined in the UK Securities Financing Transactions Regulation. Margin lending is not exempted, since it is treated as a cash loan rather than a transferable securities trade.
Responsibility for supervising the new timetable will mirror the existing regime. The Financial Conduct Authority will police trading venues and settlement system participants, while the Bank of England will oversee central counterparties and CSDs, including Euroclear UK & International.
UK lines up with EU, Switzerland and US
The UK timetable is designed to avoid misalignment with other major markets. The European Commission has already proposed October 11, 2027 as the date for moving EU markets to T+1, and an EU T+1 Industry Committee has published a high level roadmap for the transition.
Regulators and industry bodies expect Switzerland to move on the same date, creating a broad European bloc on T+1.
Globally, the UK is following a trail already blazed by the US, Canada and Mexico, which shortened their settlement cycles to T+1 in May 2024 following rule changes by the US Securities and Exchange Commission and equivalent moves in neighbouring markets.
That transition was broadly viewed as smooth, although it highlighted operational pinch points around foreign exchange and funding, particularly for non-US asset managers working across time zones.
By moving in lockstep with the EU and Switzerland, the UK is aiming to minimise cross-border frictions for investors who operate across multiple European and North American markets.
Payments and post-trade implications
While the SI itself targets securities settlement, the shift to T+1 has clear consequences for payments, liquidity and FX flows that sit behind those trades.
Shortening the settlement window compresses the time firms have to confirm trades, secure funding, execute any necessary FX conversions and instruct payments into CSDs. In practice, that is likely to push market participants towards greater automation, same-day affirmation, streamlined exception handling and tighter coordination with banks, custodians and payment service providers.
For treasury and payments teams, the new timetable may increase intraday funding pressures and sharpen the importance of efficient cash and collateral management, particularly where cross-currency legs are involved or where firms are accessing central bank money. The SFT exemption is a signal that policymakers are aware of the role of repo and lending markets in smoothing those funding flows.
The Treasury also makes clear that T+1 is a latest-permitted date, not a cap on innovation. The note points to the growing use of distributed ledger technology and increased process automation, and acknowledges that further shortening to T+0 is feasible in future. CREST already supports same-day settlement for a small share of trades. Any move to mandate T+0 would, however, require fresh legislation and full parliamentary scrutiny rather than a regulatory rule change.
Consultation and next steps
The SI is currently in draft form and has not yet been laid before the UK Parliament. The Treasury is inviting technical feedback on the text until February 2026 and intends to bring forward a final instrument ahead of the October go-live, allowing time for parliamentary debate under the affirmative procedure. An explanatory memorandum and impact assessment will accompany the final SI.
In a statement welcoming the publication of the draft rules, the FCA urged market participants to review the SI and policy note to prepare for the transition, echoing previous warnings that some smaller asset managers and alternative investment firms remain behind the curve in their planning.
