UK Accelerated Settlement Taskforce Technical Group Publishes Draft Recommendations

The U.K. Accelerated Settlement Taskforce Technical Group has published a draft recommendation report and consultation. The Taskforce was established to examine the case for the securities settlement cycle to be shortened from its current standard of Trade Date plus 2 days, or 'T+2', to Trade Date plus 1 day or 'T+1'. The Taskforce's initial recommendation was that the U.K. should move to T+1 by the end of 2027, which was accepted by the previous government who asked the newly established Technical Group to make recommendations by the end of 2024 on implementing the move. We discuss that recommendation in "UK To Move to T+1 Settlement by Latest End 2027".

The Technical Group's draft report sets out a number of draft recommendations. The main recommendation, referred to as recommendation zero, looks at the scope of instruments that will be covered by the implementation of T+1. There are two scenarios: (a) the U.K. migrates ahead of the EU/Switzerland. In this scenario, some instruments such as ETPs and Eurobonds will be exempted pending a subsequent transition to T+1 of the EU and/or Switzerland; or (b) the U.K., EU and Switzerland migrate to T+1 together, in which case it would be a straight transfer of all instruments currently covered today Central Securities Depositories Regulation.

The Technical Group also makes 43 "principal recommendations" that cover the critical post-trade activities firms must be able to complete efficiently if the U.K.'s transition to T+1 is to be successful. They cover the areas of success criteria, settlement, FMIs, static data, corporate actions, securities financing and FX. Additional recommendations are also put forward. These look at environmental issues that need to be addressed if the U.K. is to maximize the efficiency gains that T+1 can deliver but they are not essential to the successful implementation of T+1.

The deadline for comments is October 31, 2024. The AST Technical Group aims to publish the final version of the recommendations at the end of the year.

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