UK To Move to T+1 Settlement by Latest End 2027

The recently published Accelerated Settlement Taskforce report makes several recommendations to the U.K. government for moving to faster settlement of securities trades in the U.K. The main recommendation is that the U.K. should move to T+1 settlement by no later than the end of 2027. India is already on T+1 and the U.S will move to T+1 on May 28 this year (we discuss the U.S. move in our client note, "T+1 Settlement Coming May 28, 2024"). The Taskforce also recommends that the U.K. continues to explore the potential for alignment with the EU and other European jurisdictions (e.g., Switzerland). However, if that is not attainable, the U.K. should proceed in any event. Another recommendation is that certain operational changes be mandated from a date in 2025, including the establishment of market standards.

The government has accepted all of the recommendations, acknowledging that the timeframe allows enough time for proper preparation while also maintaining momentum. As recommended, the government has established the Accelerated Settlement Technical Group, which is tasked with progressing implementation of the recommendations, including determining the appropriate scope of activity, asset class, territorial application, exemptions and possible safe harbor mechanisms for ETFs and certain other securities that trade in the U.K. but settle outside the U.K. The Technical Group is also charged with selecting the dates for the recommended operational changes and the final date for U.K. transition to T+1 settlement, which should be no later than December 31, 2027. The Accelerated Settlement Technical Group must report to the government by the end of 2024 with its findings and recommendations.

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