Picking a definitive go-live date for T+1 settlement and sticking with it was key for the US, now Europe needs to do the same, said industry experts during the final week of the T+1 War Rooms initiative.
Discussions turned to the necessity of establishing a clear deadline for transitioning to T+1 across the continent – and aligning, if possible, with the UK. This mirrors the approach that successfully mobilised the US to meet the 28 May 2024 settlement deadline. One expert emphasised the importance of setting a specific date: “Picking a day – it’s huge. I’ve really only heard that this week and it makes perfect sense and that did make things very clear, there was no movement on that at all. Having a day everyone can work towards an achievable day as well.”
They added: “Nothing too aggressive or too far away, an achievable date and stick with it – I think that’s vital.” This shared sentiment across the roundtable underscores how a well-defined timeline can unify industry efforts and concentrate resources. This echoed words from our final North American War Room – where it was noted “the more time you give people to admire the problem, they’ll do it and take advantage of it.”
All experts agreed that a fixed deadline will provide regulatory certainty, ensuring that all market participants are aware of the timeline and can plan accordingly. This prevents ambiguity and promotes coordinated efforts across the industry. One post-trade expert echoed this sentiment, noting: “A date needs to be set, but not too soon because we can end up shooting ourselves in the foot and trying to race to a deadline which we haven’t even figured out.”
They continued: “We had that problem in the UK, with what the Geffen report says in terms of what day the UK should aim for… when we haven’t completed our technical assessment yet. We’re still in that one-to-two-year phase of trying to complete that technical assessment before we can decide how much work is needed before we can commit the UK to move to T+1, but I agree, once we understand what’s ahead of us, then a day is required.”
Additionally, knowing the exact date allows firms to allocate resources efficiently, prioritising the necessary technological upgrades and process adjustments.
As Gemma Watts, director, middle-office product manager, Citi securities services, explained: “We spent a lot of time with our clients first and foremost getting them to understand the affirmation process in the US market, and then in preparation, setting up segregated Trade Suite ID’s, making sure SSIs were updated in Alert, and configuring match to instruct, which meant that by May, our affirmation rates were above the industry average.
“We actively worked with clients, including their brokers, to make sure that the affirmation rates were as high as possible. I think all that preparation was key when it came down to the actual affirmation rates being higher than expected.”
Lessons for Europe
Comprehensive technical assessment is a crucial first step, agreed many of the experts, with one stressing the importance of preparation: “It shows the criticalness of the collaboration between different stakeholders within the industry… it took around three years in the US for the industry to be working together.”
Involving all stakeholders in the decision-making process is also vital, which was agreed by all at the roundtable. Regulators, financial institutions, technology providers, and market participants need to collaborate to align their efforts and address any potential challenges. Another Germany-based expert mentioned the complexity of the European market, saying: “There are some stakeholders which seem to enjoy the T+2 environment and would not be unhappy if the T+2 environment remains in place a little longer. There are a lot of different parties and stakeholders which have to be brought together here.”
A progressive timeline, similar to the US approach, can help manage the transition smoothly. The consensus amongst the roundtable is that setting interim milestones and ensuring continuous monitoring and support throughout the process can help to facilitate this.
While it is essential to set a realistic date, Europe must avoid unnecessary delays. One post-trade expert advised: “Let everyone analyse and then come up with a date based on that data. That’s a good way of avoiding it.” By basing the date on thorough analysis and industry consensus, Europe can prevent the pitfalls of either rushing the process or prolonging it unnecessarily.
What about just jumping to T+0?
One expert suggested that achieving T+1 is realistic, but T+0 is out of reach with the current infrastructure. They emphasised: “It’s a whole new ball game. T+0 isn’t possible with T2S as it stands. It would require new technology—something entirely different. T+1, however, is feasible now. It’s about adaptation and alignment across exchanges, intermediaries, market participants, retailers, and infrastructure, especially T2S.”
They further commented on the long-term goal, noting: “T+0 seems achievable in the future with advancements in technology. There are advantages and disadvantages to consider, but ultimately, T+0 appears to be the target. Currently, though, we’re talking about T+1, possibly looking towards the end of 2027, 2028, or even 2029 to gauge the timeline to reach T+0.”
Another expert agreed, saying, “Never say never—I believe T+0 will come eventually, but we’re not there yet. For now, leveraging existing systems with T+1 makes sense. It may not require fundamental technological change, but it certainly shifts behaviours and practices, which will ease the transition when T+0 becomes a reality.”