The Investment Association (IA), Personal Investment Management and Financial Advice Association (PIMFA) and Alternative Investment Management Association (AIMA) have joined forces to issue a recommendation encouraging firms to alter their fund settlement timings to T+2 on or before 11 October 2027.
The recommendation aims to align fund settlements more closely with plans in the UK, EU and Switzerland to move securities trades to T+1 by the same date, and comes one-year after the milestone move in the US to T+1 for securities trading. There is a general trend towards quicker settlement in global capital markets, to improve operational efficiencies, increase liquidity for investors and reduce manual processing demand.
In a recent report from the UK government’s Accelerated Settlement Taskforce (AST), T+2 was identified as optimal for fund settlement, to provide cash management flexibility whilst minimizing a potential funding gap with products settling at T+1. In the report, one of the recommendations (ENV 11) calls for UK-domiciled mutual funds to implement a T+2 fund settlement cycle concurrent with a UK capital markets implementation date for T+1.
Funds typically seek to apply a one-day settlement lag to provide some cash management flexibility in investing in an array of global securities and products, whilst minimizing a potential funding gap and associated costs. There is currently no standard settlement timing for UK funds, with a range in place between T0 and T+4, with the most common timing at T+3.
Chris Cummings, CEO of IA, said in a statement: “As a critical bridge between investors and capital markets, it’s extremely important that the funds industry keeps pace with broader changes in financial services infrastructure.
“The move to T+2 for funds will encourage greater global alignment on settlement cycles, enabling better services for investors, fostering a more robust financial ecosystem and improving the competitiveness of UK and European funds. We encourage firms, their service providers and the wider distribution chain to kickstart preparations for T+2, focusing on the delivery date to ensure a smooth transition.”
Liz Field, chief executive of PIMFA, said in a statement: “PIMFA and its members support the reduction of the settlement cycle for UK funds transactions to T+2. This is an important step towards greater global alignment on settlement cycles, which will foster a more robust financial ecosystem, drive economic growth, increase investor confidence and improve the competitiveness of UK markets.”
Jack Inglis, CEO of AIMA, said in a statement: “AIMA welcomes the UK Accelerated Settlement Taskforce’s (AST) roadmap for transitioning to a T+1 securities settlement cycle by 11 October 2027. We are committed to working with the industry to implement the necessary changes to ensure a smooth transition. In line with the AST’s recommendations, AIMA is actively supporting firms with the global shift towards shorter securities settlement cycles. This transition will contribute to a more efficient and competitive financial ecosystem, benefiting market participants and investors alike.”
Andrew Douglas, chair of the UK government’s Accelerated Settlement Taskforce, said in a statement: “As chair of the Accelerated Settlement Taskforce (AST), on behalf of the AST, I wholeheartedly welcome and support this recommendation from IA, PIMFA and AIMA. It fully aligns with the industry’s February 2025 T+1 Implementation plan, specifically ENV 11, both on content and the required deadline. I would encourage all participants to adopt it as part of their preparation for the implementation of Uk T+1 on 11th October 2027.”
Separately, the IA has provided its members with a list of considerations for fund managers, providing a framework for coordinated action by firms who wish to mitigate challenges presented by the market change.