Preparing for T+1 Settlement

As per FCA website, T+1 settlement means if you buy a stock or bond, it will be settled within one business day (T+1), instead of the current two-day (T+2) cycle. This change aims to make financial markets more efficient and reduce risk.

Securities that are traded and settled in the below EEA countries are in scope for EU T+1:

• Official regulation has not yet been published in the UK to mandate T+1 – only a commitment to transition to T+1 from HM Treasury, Bank of England and Financial Conduct Authority (FCA).
• Official regulation has not yet been published in the EU. The EU Commission proposed to shorten the settlement period for EU transactions in transferable securities from two days to one on February 12, 2025. The proposal has been submitted to the European Parliament and the Council for their consideration and adoption. The changes will enter into force once the co-legislators have reached an agreement on the proposal and after publication in the EU Official Journal. In addition, on October 13, 2025, ESMA published its final report on amendments to the CSDR Settlement Discipline Regulatory Technical Standard (RTS) and submitted the draft RTS to the European Commission for a three-month adoption decision. If adopted, these will undergo scrutiny by the Parliament and Council before entering into force.
• Switzerland is not part of the EU / EEA, and therefore not subject to EU legislation, including Article 5(2) of CSDR, however, swissSPTC recommends for Swiss market participants to take necessary actions to comply with the swissSPTC recommendations.

Yes, there is alignment on when UK, EU, and Switzerland are expected to transition to a T+1 settlement cycle. The expected transition date is October 11, 2027.

• In the UK, the final implementation plan published – “section 1.4 - Recommendations for the implementation of scope” identifies the scope for T+1 implementation. It highlights the general scope of Article 5(2) UK CSDR should stay the same as it is today.
•  In the EU, the high-level roadmap published – “section 2.1 - Scope” identifies the scope for T+1 implementation. It highlights the relevant provisions in EU CSDR. This would be more formalised after the ESMA RTS is published.
• In Switzerland, the swissSPTC T+1 recommendation published – “section 6 – Scope” identifies the scope for T+1 implementation.

While the UK, EU, and Switzerland have all indicated their intention to exempt SFTs from the scope of the T+1 settlement cycle, the necessary amendments to the relevant legislative texts - particularly Article 5 of the CSDR in the EU and its UK equivalent - have not yet been formally enacted. In Switzerland, the swissSPTC has recommended excluding SFTs from T+1 in its September 2025 consultation paper, but this remains subject to ongoing industry consultation and final regulatory confirmation.

Clients will be expected to agree, instruct, and settle cash flows within the T+1 timeframe by market convention for new trades on all relevant OTC equity derivatives and swaps on UK/EU/Swiss cash equities, UK/EU/Swiss custom baskets, UK/EU/Swiss indices (together ‘eligible swaps’) and global indices/baskets where UK/EU/Swiss are a majority component. 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.

On January 23, 2025, Switzerland exchange (SIX) confirmed its transition to T+1 to align with UK and EU. On September 12, 2025, swissSPTC published industry recommendations to help prepare for T+1 go-live date.

Borsa Istanbul (BIST) announced that all preparations for the T+1 transition (analysis, development, testing and other processes) must be completed by December 31, 2026. There is ongoing discussion between BIST, members and market participants regarding T+1 transition.

Non-UK/EU/Swiss clients trading in eligible products in UK/EU/Swiss trading venues and central securities depositories (CSDs) will be subject to the changes.

Non-UK/EU/Swiss clients trading in eligible products off venue may also be in scope due to market convention.

The applicability of the scope is not based on the location of where the trade was initiated from but where the transferable securities have been traded and/or settled.

For transactions subject to T+1 settlement in each jurisdiction (e.g. those traded on a UK, EU, or Swiss regulated venue and settled in the respective CSD), the following rules apply:

In the UK:

• All allocation and confirmation processing, where carried out, will be completed as soon as reasonably practicable and prior to any deadline set by any relevant intermediary, and no later than 23.59 UK time on T+0.
• All settlement instruction submissions to the CSD will be completed as soon as is reasonably practicable and prior to any deadline set by any relevant intermediary, and no later than 05.59 UK time on T+1.

In the EU:

• All allocation and confirmation processing, where carried out, will be completed as soon as reasonably practicable and prior to any deadline set by any relevant intermediary, and no later than 23.00 CET on T+0.
• All settlement instruction submissions to the CSD will be completed as soon as is reasonably practicable and prior to any deadline set by any relevant intermediary, and no later than 23.59 CET on T+0.

In Switzerland:

• All settlement instruction submissions to the CSD will be completed and matched no later than 23.15 CET on T+0.

There has been no official announcement whether UK Certificateless Registry for Electronic Share Transfer (CREST) fines and EU CSDR settlement penalties would be suspended during the T+1 transition period.

We recommend that clients review the industry resources from various trade associations to best understand how the change will affect them. Some of the challenges raised across the industry include securities lending, foreign exchange, cross-border transactions (exchange traded funds, global baskets, depository receipts et al.) and multi-listed securities.

We recommend that allocations and confirmation processing, where carried out, to be completed electronically using a recognised industry standard and corresponding data dictionary, including as part of ‘trade matching’ on a platform that supports an electronic trade confirmation (ETC) process, or via other automated services. A front to back automated solution would be beneficial to meet the T+1 deadlines.

We have concluded a thorough impact assessment of all potentially affected business processes and identified the high-level changes required to meet regulatory and industry-imposed operational deadlines and technical requirements necessary for a shortened settlement. Work is now underway to make the necessary changes to bring our processes into compliance and effect a smooth transition to T+1 for our affected clients.

Bank of America is actively engaged with industry working groups and forums and continues to review the mandatory recommendations to adapt and implement the necessary automation where possible. Please contact your dedicated client service representative or sales contact if you have specific questions.

Bank of America’s settlement instructions remain unchanged – subject to mandatory requirements in the UK, EU, and Swiss regulation. We encourage clients to provide us with settlement instructions for allocations at the time of trading, or prior to placing an order, to avoid any delays in trade date confirmation or allocation.

Bank of America will require clients to adhere to the T+1 settlement cycle for in scope instruments and transactions subject to CSDR article 5(2) and market convention / practice. For non-standard settlement or extended settlement transactions (T+2 or greater) may be requested on an as needed basis and will be subject to approval dependent on known market practice. Please speak to your trading or sales coverage prior to submitting extended settlement securities transactions. Bank of America will not approve or execute extended settlement on a continuous or permanent basis.

We recommend that all market participants do the following:

• Familiarize yourself with industry timelines, expectations and considerations outlined in the most recent published documentation below:
• UK: UK AST Technical Group draft report and recommendations and UK AST Technical Group final implementation plan
• EU: High-level roadmap to T+1 settlement in the EU
• Swiss: T+1 in Switzerland and Liechtenstein
• Create your own plan to comply with the change.
• Discuss your focus areas or areas of concerns with your dedicated client service representative or sales contact.
• Notify your dedicated client service representative or sales contact if you want to perform testing with Bank of America.

We recommend automating settlement processes by adopting available post-trade solution technology to reduce the risk of settlement failure. If automating settlement process is not possible, it is recommended to implement the core principles and templates contained in the Financial Markets Standard Board (FMSB)’s Standard for Sharing of SSIs. 

It is important to work with your custodians and prime brokers to ensure timely instructions to the market and efficient funding and inventory management processes.

We also recommend automating post trade operations / activities for allocations and confirmation processing.

The following has been recommended by the UK and EU industry taskforces:

• The UK AST final implementation plan, as outlined in recommendation SETT 09a, anticipates the publication of new market practice guidelines by December 31, 2025. These guidelines will require brokerage firms, custodians, and buy-side participants to adopt and implement this market practice.
• The EU T+1 IC high-level roadmap strongly recommends the use of PSET, as outlined in recommendation MC-02, which mandates that PSET be provided at the point of allocation, as soon as possible.

Please note that PSET recommendation is absent in the Swiss T+1 recommendation, however, PSET is an important factor for settlement efficiency. Vendors are seeking to mandate PSET usage across settlement platforms to promote consistent and widespread implementation.