As global markets prepare to transition to T+1 settlement cycles, stakeholders are bracing for significant operational changes.
In North America, T+1 has already been successfully implemented, with the US, Canada, Mexico, and other markets leading the way. Meanwhile, Europe and the UK are aiming for a 2027 rollout. To better understand the key challenges and lessons learned from these transitions, we spoke with David Kirby, Managing Director, DTCC Consulting Services, who shared his insights on what firms need to consider in the years ahead.
Identifying Key Challenges
“The primary challenge facing firms as they transition to T+1 is the reduction in the settlement window,” Kirby explains. “Once a trade is executed, the time between the trade date and settlement date is shrinking, and this exposes where manual or semi-automated processes exist in the trade lifecycle.”
Kirby emphasizes that many firms have historically relied on manual interventions to resolve issues, often by increasing headcount during peak periods. However, as the settlement window shortens across additional markets, throwing bodies at the problem is contributing to burgeoning operational costs. Thoughtful, strategic solutions are required to balance supporting the client experience and remaining commercially viable. Process redesign may be required to future proof businesses in an increasingly complex regulatory environment.
“Firms need to focus on automating processes to reduce reliance on manual interventions,” he notes. “Whether it’s reference data management, trade matching, or instructing counterparties, firms must enhance their operational efficiency.”
Beyond internal processes, the complexity of the European market presents unique hurdles. “Unlike the US, where market structure is relatively straightforward, Europe has multiple exchanges, central securities depositories (CSDs), international central securities depositories (ICSD) and clearing service providers ,” Kirby points out. “Each market has its own nuances, and firms need to ensure their data structure, platforms and processes can accommodate these differences.”
Learning from North America’s Transition
The successful implementation of T+1 in North America offers valuable lessons for Europe. According to Kirby, “One of the key factors in the US was regulatory certainty. The regulator set a firm date, and the industry worked toward it. This allowed firms to align their resources, technology, and processes effectively.”
A detailed playbook, developed in collaboration with the US’s Securities Industry and Financial Markets Association (SIFMA), also played a crucial role. “The playbook outlined what firms needed to focus on and provided a roadmap for implementation,” Kirby explains. “We expect a similar approach to be , which will help firms navigate the transition smoothly.”
Despite the overall success in North America, there were lessons learned regarding counterparty interactions. “You’re only as good as your worst-performing counterparty,” Kirby says. “Even if a firm is fully automated, delays can occur if counterparties are not prepared. Firms need to assess their counterparties and ensure they are aligned in terms of readiness.”
Regulatory Considerations
When framing out T+1 programs, regulatory compliance is a critical aspect. “While regulatory frameworks across markets are generally consistent, firms must pay attention to matching timelines, instruction deadlines, and automation requirements,” Kirby advises. firms will need to adhere to these guidelines to ensure compliance.”
Kirby also highlights the importance of clear policies and procedures. “Depending on a firm’s role in the market—whether they are an infrastructure provider, broker-dealer, or custodian—the regulatory requirements may vary. Firms need to ensure their internal policies reflect these requirements and that they have the necessary systems in place to support them.”
Preparing for T+1: Where to Start
For firms beginning their T+1 preparation, Kirby recommends starting with an internal impact assessment. “Firms need to understand how the regulation impacts their specific business model and operations,” he says. “This includes assessing client impacts and ensuring that processes are streamlined to provide a seamless client experience.”
He underscores the importance of early preparation. “We helped many firms prepare for the U.S. transition, from initial impact assessments, counterparty review and testing preparation, those that started early had more time to address gaps and improve operational efficiency. There’s already a lot of material available from ESMA and the UK task force, so firms have the opportunity to get ahead of the curve.”
Looking Ahead: Could T+0 Be Next?
While T+1 is the immediate focus, there has been speculation about the possibility of moving to T+0 in the future. Kirby acknowledges the interest but stresses that significant hurdles remain. “There are a lot of processes that occur between trade date and settlement date—inventory management, stock lending, FX and more—that would need to be assessed prior to movement on T+0 ,” he explains.
Technology advancements such as distributed ledger technology (DLT) and artificial intelligence (AI) could play a role in enabling T+0, but Kirby is cautious about setting expectations. “There’s no silver bullet. Moving to T+0 would require alignment across thousands of market participants, vendors, and regulators. It’s a complex ecosystem, and while technology can help, it’s not a unilateral decision.”
Ensuring a Smooth Transition
With multiple markets moving toward T+1, ensuring consistency across processes is vital. Kirby suggests that firms should prioritize standardization and data cleanliness. “Clean reference data is foundational to efficient settlement. Firms need to standardize settlement instructions and leverage market practices to reduce errors,” he advises.
Kirby concludes with a reminder of DTCC’s role in supporting the industry. “We offer a range of solutions, from our Institutional Trade Processing services (CTM and ALERT) and strategy to connect with market infrastructure globally, to DTCC Consulting Services conducting impact assessments and supporting firms through Process Optimization initiatives. We saw first-hand through our engagements helping clients prepare for US T+1, that starting early and leveraging available resources can make a significant difference in the transition. ”
As Europe and the UK gear up for T+1, the experience of North America provides a valuable playbook. The implication of non-compliance is yet to be determined, but could span from fines to increased operational costs to diminished client experience. Clients are already engaging DTCC Consulting Services to navigate this complex set of regulations in order to stand out against their peers. With early preparation, a focus on streamlining data models, automating processes and removing manual touchpoints, firms can navigate the complexities of accelerated settlement and ensure a successful transition.
This interview forms part of a DTCC / Funds Europe report on “Navigating the Transition to T+1 in Europe” and can be viewed here.
