European T+1 Settlement

In May 2024, the US, along with Canada and Mexico, shortened the standard settlement cycle for most broker-dealer transactions from two business days after the trade date (“T+2”) to one business day after trade date (“T+1).

This triggered a discussion in the EU/EEA, Switzerland, and the UK on the need to follow on the path to T+1 to ensure global alignment with a target date for these countries of 11 October 2027.

In the UK and EU/EEA, the changes will be implemented by amendments to Article 5 of UK, or as applicable EU, Central Securities Depositories Regulation (“CSDR”). In Switzerland, no legal changes need to be implemented but rule books and other regulatory documents of financial market infrastructure will be amended accordingly.

Given the complexity of implementing T+1 across the trading and post‑trading environment, the UK has established the UK T+1 Accelerated Settlement Task Force (AST), the EU has created the T+1 Coordination Committee and T+1 Industry Structure, and Switzerland has formed a dedicated T+1 Task Force (the “Task Forces”). Together, these groups will coordinate efforts to guide the UK, the EU/EEA, and Switzerland through the transition to T+1¹.

Successful transition depends on coordinated changes across the industry.

¹Liechtenstein, while an EEA country implementing CSDR, is aligned with the Swiss market infrastructure for purposes of T+1

Preparation for T+1

Based on Task Force and industry recommendations and lessons from markets that have already transitioned to T+1, clients should focus on the following preparation areas for T+1:

1. Complete post‑trade processing on Trade Date (T):

Systems should be updated for end-to-end automation so trades can be allocated, confirmed and affirmed on T using electronic, automated processes. Allocation processes assign the trade to the correct account, while confirmation and affirmation ensure both parties agree the trade details.

PSET will need to be included in the allocation and SSIs will need to be sent on T to ensure eligibility for overnight settlement processing and to reduce settlement exceptions on T+1.

Automation of key operational steps is strongly recommended to reduce settlement failures ahead of the 31 December 2026 deadline.

2. Secure liquidity, FX and funding earlier:

Processes will need to be updated such that if currencies are required to be exchanged to pay for securities, the FX trade will need to be executed on T, so the funds are available for T+1. Banks may also require you to complete the FX earlier in the day on T, to ensure the payment can be processed overnight.

3. Strengthen settlement readiness through proven efficiency tools

Consider implementing Hold & Release, auto‑partial, and instruction shaping processes. Proactively monitor getting settlement instructions completed early on T+1 to improve resilience and support timely completion.

4. Improve static data and securities lending readiness:

While SFTs are not required to follow T+1, the timing for requesting back borrowed securities and returning them will need to be standardised across market participants. You will need to work with market participants to ensure this is in place.

SSIs and PSETs should be maintained in a single, well‑controlled source so they are readily available for same‑day use.

5. Inventory/resource mobilization

Due to the shortened settlement window, you will need early clarity on where securities are held and where they will settle. There will be little time to correct errors in holding or settlement location which may block settlement.

If applicable, Processes should ensure that holding location is included on confirmation statements, and PSET is included at allocation.

Industry Testing in 2027

T+1 industry‑wide testing cycles will run in 2027 across market participants. Participation may require connectivity tests and workflow checks.

UBS is preparing for industry T+1 testing through early alignment to the industry test strategy, dedicated internal governance, structured engagement with market participants, and coordinated participation in end‑to‑end industry testing cycles ahead of the 2027 transition.

Clients are recommended to join testing cycles, coordinate with UBS and other market participants early, and validate readiness ahead of go‑live.

Funds & Asset Management Mandates

Funds operate on defined subscription and redemption settlement cycles. As securities settlement cycles shorten, fund managers are expected to review and, where appropriate, shorten fund settlement cycles to optimize cash management and performance. Changes will typically reflect the fund’s primary investment geography and whether the strategy is active or passive.

UBS Asset Management, together with its fund management companies and appointed counterparties, is assessing the impact across funds and mandates. Any settlement cycle changes will be communicated via established channels in advance of the European T+1 transition on 11 October 2027.

Ongoing engagement

UBS continues to monitor regulatory developments and industry guidance related to the transition to T+1 settlement.
Clients are encouraged to engage with their UBS contacts to discuss preparedness, testing participation and potential operational impacts relevant to their activities.