FCA supports move towards faster settlement cycle for fund trades

The UK Financial Conduct Authority (FCA) has published a press release welcoming a joint statement from asset management trade associations supporting the transition to faster settlement of trades in funds. Effective from 11 October 2027, the settlement period for transactions in listed stocks and bonds in the UK, Switzerland and the EU will change to T+1, meaning trades will settle within one business day. The FCA acknowledges that the operational practicalities of fund settlement will not allow all authorised fund managers to offer T+1 settlement for units in funds. For UK authorised funds and recognised schemes, the FCA supports the recommendation of moving towards a T+2 settlement cycle to align with the consumer duty and better support retail investors in meeting their financial goals. The FCA states that funds currently operating on T+4 cycle should carefully consider how an extended gap between market settlement and fund unit settlement would impact investors. The FCA advises fund managers to begin planning early for the transition and notes that, going forward, any settlement period longer than two business days will require strong justification.

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