UK FCA's expectations for transition to T+1 securities settlement

The UK Financial Conduct Authority (FCA) has published a letter addressed to asset management and alternative firms outlining its expectations ahead of the UK's transition from T+2 to a T+1 securities settlement cycle, effective from 11 October 2027. The FCA has identified that some small and medium-sized asset managers and alternative investment firms may not yet be fully aware of the operational changes required. As such, the FCA reiterates its expectations and urges all impacted firms to proactively assess their readiness. With two years remaining, firms are expected to plan now to ensure their settlement processes, particularly those reliant on manual workflows, are sufficiently automated to meet the demands of a shortened settlement cycle.

By the end of the year, the FCA expects firms to action the following below.

• Familiarise themselves with the recommendations within the Accelerated Settlement Taskforce (AST) implementation plan and establish a project plan to move to T+1 settlement by October 2027.
• Carry out end-end reviews of their trading, clearing and settlement arrangements, identifying manual processes and blockages that could be fixed or enhanced to facilitate a faster settlement cycle.
• Review inventory management to ensure timely availability of cash and securities for settlement.
• Contact settlement agents to understand any changes needed for T+1 compliance.
• Coordinate with providers to ensure readiness for T+1, if they outsource their relevant trading, settlement or other operational services.
• Prepare for timely recalls and notify intermediaries promptly when securities are sold, if they are involved in securities lending.

By the end of 2026, firms should have implemented all required changes, including key AST recommendations. In 2027, they are expected to test updated settlement processes, internally and with external parties, to ensure readiness for T+1 by 11 October 2027. Testing should occur early to identify any issues that require fixing. The FCA sets out additional resources that firms may refer to, confirms it will continue monitoring progress and may request updates on firms' transition plans.

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