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T+1: An Evolution, Not a Revolution
The journey toward T+1 settlement is underway. While it represents a significant step forward, it builds on existing processes rather than overhauling them entirely. Key enablers such as partial settlement and partial release will be instrumental in achieving faster, smoother operations. Early detection of discrepancies will also play a vital role in minimising settlement failures.
Why T+1 Matters: Benefits and Opportunities
- Increased Settlement Rates
Partial settlement allows transactions to settle for the available quantity even when full securities are not present. This reduces the volume and value of failed trades, improves liquidity, and can generate financial gains. - Reduced Penalties
By lowering the value of failed transactions, firms can reduce their exposure to penalties. This has a positive ripple effect across counterparties and the broader settlement chain. - Enhanced Liquidity Management
Partial release mechanisms enable more effective cash liquidity management, giving firms greater flexibility in handling their financial resources. - Operational Efficiency
Automating partial settlement and release processes minimizes manual intervention. This reduces the need to cancel and reinstruct trades, easing operational burdens and lowering risk. - Greater Client Control
Stakeholders can opt in for partial settlement on a per-transaction basis, allowing them to tailor services to their specific operational needs.
Addressing Pre-Settlement Inefficiencies
Trade matching remains a challenge, particularly due to inefficiencies in passing on clients’ standing settlement instructions (SSIs) due to lack of standardisation. Manual processing and inconsistent data elements hinder settlement matching and efficiency. Similarly, the format of settlement instruction messages contributes to non-STP (Straight-Through Processing) workflows and exceptions.
To support the transition to T+1, the industry must focus on the implementation of messaging adoption and the adoption of commonly agreed-upon market practices. This will grant interoperability and be supported by clearly documented technical requirements. These efforts will help streamline pre-settlement processes and promote timely, efficient settlement across the EU.
Time to Act
With less than two years to go, the move to T+1 is no longer a distant milestone—the deadline is just around the corner . Market participants must act now to adapt systems, refine processes, and collaborate across the industry. The transition offers a unique opportunity to modernise post-trade operations, reduce risk, and unlock greater efficiency. The clock is ticking—are you ready?
Comments by Paola Deantoni, senior advisor, public affairs, Societe Generale Securities Services
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