If you have any questions on T+1, please contact your dedicated client service representative or sales contact or reach out to T1questions@bofa.com.
Preparing for T+1 Settlement
Addressing the shortened settlement cycle of UK / EU / Switzerland Securities.
Key takeaways
- UK, EU, and Switzerland have announced T+1 compliance date of Monday, October 11, 2027.
- The legislative driver for the transition to T+1 in the UK & EU is an amendment to Central Securities Depositories Regulation (CSDR) Article 5 which is currently in progress.
- All trade allocations and confirmation processing should be completed on trade date (T+0) according to published rules.
- For OTC equity derivatives and swap trades - clients will be expected to agree, instruct, and settle cash flows in a T+1 timeframe by market convention. All accruals and settlements will be set up as T+1 settlement for new trades going forward on these products as of the relevant market transition date.
- Bank of America is an active member of the UK and EU T+1 Industry Working Group and will participate in T+1 industry testing.
Overview
Following the US, Mexico and Canada’s transition to T+1 in May 2024, the UK and EU have performed detailed assessments on the industry’s ability to transition to a T+1 settlement cycle.
In the UK, following a period of industry consultation, the UK Accelerated Settlement Taskforce (AST) announced a pre-settlement activities deadline of 31 December 2026 and the T+1 transition date to be 11 October 2027.
European Securities and Markets Authority (ESMA) has recommended 11 October 2027 as the optimal date for the transition to T+1 in the EU and supports a coordinated approach with other jurisdictions in Europe. Given the complexity of implementing the changes needed to move to T+1 to the trading and post-trading environment in the EU, ESMA, the European Commission and the European Central Bank (ECB) set up a T+1 industry committee to coordinate the industry shift to T+1.
On 23 January 2025, Switzerland confirmed to align with UK and EU to transition to T+1 on 11 October 2027.
The transition to T+1 is expected to benefit investors and other market participants with reduced costs, increased market efficiency and reduced settlement risk in security transactions.