When the Accelerated Settlement Taskforce (AST) published its Implementation Plan in February 2025, we identified a number of desirable behaviours that we, the 450+ volunteers from 116 firms, believed would underpin success in the implementation of T+1 for the majority of participants. The first was a commitment to automation.
Why did we recommend this and make it, among other behaviours, a key part of the foundation of our implementation plan?
Some reasons were obvious at the time, some have become more apparent over time. Initially, it was clear that the move to T+1 compresses, quite dramatically, the time available to complete all post-trade processes on which settlement relies. Data management, trade confirmation, allocation, matching, funding, stock loan recalls, and corporate actions are all still required but must be completed within a one-day window. This, considering deadlines, is not a 50% reduction in available time, but more like an 80% reduction. This means that all current activity will need to be completed in 20% of the time that is currently available. The consensus of the AST members was that such compression can only be realistically addressed through automation.
This conclusion was supported by empirical evidence from the US migration to T+1, which gives the UK a second-mover advantage, if you will. We did not need to hypothesise; we actually saw the real impact of not automating by looking at pre- and post-US implementation surveys. Three months before go-live, an average of 28% of T+1 automation projects had a completion date after the implementation date in May 2024. A second survey in September that year identified an increase of up to 18% in staffing costs, most harshly felt by smaller firms where automation was either not planned or late in delivery.
The lesson was very clear: if you didn’t automate, your costs would go up principally because you need to ‘body shop’ a workaround, such as taking on additional staff to cope. An 18% increase in staffing costs cannot be considered a satisfactory long-term solution. In an industry where a 50-150 basis point increase in ‘alpha’ through astute investment would be considered a good result, an operational expense rise of 1800 basis points is not sustainable.
We could see this by the end of 2024 as we constructed the UK T+1 Implementation Plan.
Since then, the digital revolution has begun to gain pace in the world of finance. We hear more talk of 24-hour trading up to seven days a week, of instantaneous settlement, of tokenisation and fractionalisation of assets. Support for these activities will demand the ability to potentially deal seamlessly and in a cost-effective manner with trades in new instruments, spikes in value and volume, 24-hour activity and more cross-border investment. All this is best served by a digital back office. As a Head of Ops said to me only last week, my digital staff can service business whilst I am asleep.
Staying competitive
And this brings us to the competitive dimension. Firms that rely heavily on manual intervention will likely enjoy ‘benefits’ such as higher fail rates, increased liquidity strain, and rising operational costs. They will need larger teams working longer hours to meet compressed deadlines, which will erode margins as well as potentially increase error rates. Automated firms, by contrast, can process higher volumes with greater accuracy and predictability, positioning themselves to operate more efficiently in a T+1 world.
While some may point to cost and complexity as barriers to automation, particularly for smaller firms, the cost of inaction is higher. Settlement failures could lead to regulatory scrutiny, reputational damage, and emergency remediation efforts. This, in the long run, is likely to be far more expensive than investing in automated infrastructure.
Modern automation does not require wholesale system replacement. Good data is crucial, but targeted improvements such as automated affirmation, standardised messaging, and real-time reconciliation can deliver meaningful gains without destabilising existing operations.
Critically, automation is not just about speed; it offers better control and transparency, too. Automated workflows generate structured data, audit trails, and real-time visibility into settlement status, enabling firms to identify bottlenecks early and make better intraday funding decisions.
What’s more, we are already seeing a desire by some automated firms to identify counterparties with similar levels of automation for precisely these efficiency and accuracy reasons. This is creating momentum towards automation and signalling to firms who have not yet started that they should do so, and soon. Don’t be left behind.
Do I have to automate?
I get asked this a lot. The beauty of a principles rather than rules-driven environment that has prevailed in The City, is that there are options.
If you are a firm whose principal business is not investment, then automation is likely to be difficult to justify. But The City is a flexible and can-do place. There will be counterparties and service suppliers out there that will welcome the opportunity to work with you. For higher volume players, outsourcing might be a better solution; your partners will automate and scale so you don’t have to. And for others, it is a buy or build solution. But all of these have one thing in common: they take time to design, negotiate, agree and implement.
This takes us to our second recommended behaviour that forms a key foundation of the UK T+1 Implementation Plan.
Action this day
The second behaviour was a commitment to ‘action this day’. In simple terms, this is to quote the manufacturer of my footwear of choice: ‘just do it!’ The clock is ticking. It is not too late, but it soon might be. Act now on whatever your chosen strategy is. Inaction is seldom the correct answer.
Ultimately, this is a data play, making sure the right data is in the right place at the right time. Automation is one tool that will help participants settle on time and accurately, and at the lowest marginal cost. We believe that for the majority of participants, it is sensible to both comply with T+1 but also to lay the groundwork for an eventual move to a digital market.
Efficient, resilient, cost-effective, profitable, part of the future – why wouldn’t you want your firm to be this kind of participant?
Funds Europe is hosting a roundtable in March 2026 on T+1 issues facing the industry. A report on the discussion will feature in the March/April issue of the magazine.
