Pan-European T+1 transition is gaining momentum with publication of the EU T+1 roadmap

At a glance

• The EU publication of the T+1 Industry Committee’s high-level roadmap to T+1 securities settlement marks a significant step towards a pan-European T+1 transition by 11 October 2027. The report follows the publication of the UK Accelerated Settlement Taskforce (AST) recommendations in February.
• There is alignment between the EU and UK in the scope of transition, key timelines and the focus on automation but there are also differences in the approach, level of detail and some focus areas. Overall, the two reports are fairly complementary - the UK provides a more holistic behaviour-oriented approach whereas the EU Committee’s recommendations are more detailed and nuanced.
• This paper compares the EU roadmap with the UK AST recommendations, highlighting key similarities, differences, and implications for pan-European market participants.
• Firms should now carefully review both the EU and UK roadmaps, identifying relevant recommendations based on their business models and promptly kick off implementation plans.
• The timelines for achieving a smooth transition are getting tighter. Planning and budgeting need to happen by the end of 2025 followed by implementation in 2026 to ensure enough time for industry-wide testing in 2027. A proactive approach, focusing on automation, testing, and stakeholder communication, is crucial for a successful transition to T+1.

UK and EU T+1 transition alignment

The EU T+1 Industry Committee, consisting of 10 member and 10 observer associations¹  from across the capital markets industry, has published its T+1 transition roadmap. Although there is alignment in core areas with the UK AST recommendations, there are also some variations in the approach and level of detail which we highlight below.

Key similarities:

Focus on Automation: Both roadmaps share the overarching goal of enhancing automation and standardisation across the trade lifecycle, focusing on key processes such as trade matching, securities lending, FX booking, and corporate actions handling.

Scope of Application: Both the EU and UK transitions apply to transferable securities traded on respective trading venues and those settled in registered CSDs. Exemptions are similar, covering privately negotiated transactions executed on trading venues, bilaterally executed transactions reported to trading venues, initial security recordings and SFTs.

Securities Financing Transactions (SFTs): The AST’s exemption of SFTs from the scope of T+1 transition had created a potential misalignment with the EU. However, this has now been resolved as political agreement was reached between the EU co-legislators in a trilogue meeting on 18th June 2025 on an exemption for SFTs provided they are “documented as single transactions composed of two linked operations”.

Key differences:

The UK and EU recommendations are largely complementary, but some nuanced differences still exist. All firms operating in financial markets across UK and EU need to review both sets of recommendations and develop a holistic approach in tackling various milestones and complexities.

Flexibility of the approach: The tone of the UK approach seems to make it obligatory and doesn’t leave an option for non-compliance (e.g., critical actions “must be implemented by all market participants”). The EU approach appears to give firms more optionality. Whilst the EU strongly encourages adherence, it acknowledges that one size wouldn’t fit all and notes that the recommendations are not legally binding. However, this should not induce complacency. Firms choosing not to adopt the Committee recommendations should do so in a way that does “not cause operational or financial detriment to other actors”. Firms which do not comply may be required to explain their non-adherence to their stakeholders and potentially face commercial consequences.

Emphasis on behaviours vs detail: The UK approach prioritises a holistic, behaviour-driven transition emphasizing automation, readiness for testing, compliance, acting with urgency and ensuring settlement discipline. The EU recommendations are more detail-oriented prescribing very specific timings for various “gating events” and settlement-related processes. In practice, it is likely that a firm operating across the EU and UK will adopt a more detailed approach across both jurisdictions to satisfy both requirements if there is no direct contradiction.

Role of Financial Market Infrastructures (FMIs): Although both jurisdictions recognise the crucial role of FMIs in the successful transition, the UK's approach is more concise, whereas the EU's recommendations are more detailed and complex due to the fragmented nature of its infrastructure. In the UK, the AST requires FMIs by end-2025 to review all existing procedures, policies, operating frameworks, and technology to ensure there are no barriers to T+1 and by end-2026 to communicate to their users and implement any proposed updates. Euroclear UK & Ireland is expected to publish the CREST modernisation programme providing a clear timeframe for firms to adjust their settlement processes.

The EU report contains 24 high priority recommendations which relate to FMIs and span trading venues, CCPs, settlement intermediaries, CSDs etc. To address the complexities of its fragmented infrastructure, the EU introduced a single standardised operational timetable which includes a number of “gating events” - post-trade activities and processes - mapping 11 events with an hourly breakdown for relevant parties. By comparison, the UK AST report highlights only two time-specific events. There are also some differences in proposed timing. For instance, the UK requires completion of all allocation and confirmation processing no later than 23.59 UK time for a given trading day, whilst the EU targets 23.00 which will be 2 hours earlier for UK traders. The EU has a clear timing requirement for stock loan recall of 17.00 on a trade day, while the UK expects market participants to adhere to ISLA guidelines which don’t have a prescribed timing.

Figure 1: EU “gating events”

Source: EU T+1 roadmap

Specificity of recommendations for Repos and ETFs: The EU Committee provides more specific requirements for Repos and ETFs. The committee proposes additional intraday batch/net settlement cycles for Repo transactions to mitigate intraday liquidity and settlement efficiency risks stemming from late trade instructions, particularly given the high volume of T+0 repo trades. It also asks for regulatory clarifications to ensure that cash breaches caused by settlement misalignment in ETFs are categorised as passive and non-reportable to minimise the administrative and operational burden.

FX: Overall, the approach to FX is similar between the two jurisdictions. The focus remains on reducing settlement risk with the increased number of currencies involved since the US transition last year. Market participants should engage with custodians and third-party providers to ensure timely FX transaction execution. The EU Committee, however, specifically emphasises the need to consider liquidity patterns for CZK, PLN, RON, and ISK; the potential increase in partial security settlements and its impact on FX funding decisions; the effect of late trading in other asset classes on FX requirements; and the need for prompt securities trade allocation. Time should be spent on analysing process timelines firm to firm, to stay in line with CLS deadlines.

Corporate actions: The UK recommendations focus on dividend processing and review of claims policies, processes and systems that capture corporate actions claims to ensure they are compatible with the T+1 settlement cycle. In the EU, there is greater emphasis on automation of buyer protection processing² which is currently mostly manual. The report emphasises that in a T+1 environment automated functionality will be needed to ensure timely processing of buyer protection instructions. The EU also specifically asks for automation of workflow and standardisation of messages for market claims processing.

Fund settlement: Similar to the UK, the EU recommends reduction of the settlement cycle for subscriptions and redemptions of investment funds to T+2, but also retaining the flexibility where needed and not penalising investment funds where transitioning is not feasible. The fund settlement cycle should be reduced “where there is opportunity to do so” but “given complexities involved, it may not always be practicable or possible by 11 October 2027”.

Derivatives: The EU excludes from CSDR's T+1 requirement derivative transactions not settled on a CSD's books, including collateral movements or underlying security deliveries related to derivatives. However, industry debate continues on whether some derivative-related flows (e.g., underlying security delivery upon exercise/expiry) should adopt a default T+1 settlement. Separately, the UK's AST will continue engaging with the derivatives industry in 2025 to explore how T+1 could apply to exchange-traded and OTC derivatives, including related cash and securities settlements.

Regulatory backdrop

The EU has now reached political agreement on the Level 1 CSDR amendment in relation to the T+1 transition. The next step is formal adoption by the European Parliament and Council and publication in the Official Journal which is expected in Q3 2025. The UK is yet to bring the legislation forward to amend the UK CSDR.

In addition to exempting SFTs, the EU political agreement also contains a recital that empowers the EC to consider a temporary suspension of cash penalties “where material risk in settlement fails is identified”. The EC will closely follow market developments and the volume of settlement fails.

ESMA is working on Level 2 amendments to CSDR and expects to submit a draft report to the EC in Q4 2025. In addition, ESMA will publish a consultation paper on amendments to existing guidelines on standardised procedures and messaging protocols in Q1 2026 and final guidelines in Q3 2026.

In the EU, national-level adaptations to T+1 transition may be needed (e.g., in relation to registered shares, SEPA Direct Debit adjustments). The technical workstream will continue monitoring national-level specificities.

Supervisors are likely to closely monitor preparations for the transition. In the UK, the Chancellor, the BoE and the FCA swiftly endorsed the AST’s recommendations and clearly communicated their expectations around timely compliance. In the EU, the Committee said that public authorities should consider the recommendations in their supervision.

Next steps

The Committee Chair, Giovanni Sabatini, acknowledged that the publication of the roadmap is only the first of many steps on the T+1 journey: “Further challenging work lies ahead in terms of facilitating adherence with the recommendations, developing more detailed market practices where necessary, supporting the monitoring of implementation and preparing the testing phase”. Many technical workstreams will continue their operations and some new ones will be established, such as an EU industry taskforce to develop a single “gold standard” format for Standard Settlement Instructions (SSI) and agree a standard for SSI management and exchange.

A key question remains around industry-wide external testing. Neither jurisdiction has so far given any details on its testing approach and arrangements but it is likely that the UK, EU and Switzerland will align their testing schedules. The final design of the industry-wide testing process for T+1 could have implications for the specific changes firms need to implement and the associated costs.

As an immediate next step, firms should ensure they have initiated contact with the correct stakeholders within their respective Transformation and Operations teams to set up the Governance required to deliver T+1. We anticipate workstreams to be set up per focus area e.g. Static Data, FX, Corporate Actions etc. 2025 is the year of impact analysis with a view of implementation through 2026 and testing in 2027. Given the tight timelines, completing impact analysis now is key so roadmaps can be reviewed, budgeting complete and delivery teams initiated. A proactive strategy, focused on automation, thorough testing, and effective stakeholder communication is essential for a successful transition.

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References:

1. The observers included the European Commission (EC), ESMA and ECB as well as representatives from the UK and Switzerland.

2. When a buyer hasn't yet received securities involved in a corporate action, buyer protection lets them tell their account provider which corporate action benefits they want to receive.