The industry-led Accelerated Settlement Taskforce was originally launched as part of the UK Government’s Edinburgh Reforms in December 2022 to explore the potential for faster settlement of securities transactions in the UK. In late March, chair of the UK Accelerated Settlement Taskforce, Charlie Geffen, published the first report answering the ‘if versus when’ question for T+1 in the UK.
The key recommendations of the “Geffen Report” – accepted in full by HM Government – are:
- UK should commit to moving to a T+1 settlement cycle by no later than 31 December 2027
- UK should explore collaboration with other European jurisdictions with a view to coordinating respective moves to T+1, if this makes sense
- Establish a Technical Group (TGT1) comprised of cross-industry experts to determine the ‘how’ withrespect to identifying the technical and operational challenges and changes necessary toachieve T+1 by year end 2027
With respect to meeting a transition date no later than end December 2027, a key imperative for the TGT1 is establishing a plan for 2025 to deliver the changes necessary to support the implementation of T+1. Some 400 plus individual volunteers, representing 99 financial institutions, firms and industry associations, are currently actively engaged in the ‘technical’ conversation, and there are five overarching workstreams focusing on: Operations, Alignment, Trading & Liquidity, Lessons from North America and Legal & Regulatory.
These high level workstreams have established sub-streams focused on addressing specific elements and challenges in achieving T+1; for example, paying particular attention to stock lending and the recalls process. Each workstream and sub-stream is tasked with identifying the problems that will need to be overcome if T+1 is to be implemented successfully, together with actions needed to mitigate or eliminate the problems.
The leaders of each workstream coordinate and communicate output to the group-wide oversight committee to ensure that all overlaps in workstream discussions are addressed and no problem is overlooked. These conclusions and recommendations will be published in September for a short period of industry consultation, before finalizing for final publication in December, together with the confirmation of the transition date for the implementation of T+1.
There are two big caveats with respect to this date; what happens on May 28 in North America, and what recommendations EU regulator European Securities and Markets Authority (ESMA) makes in its report on T+1, expected in Q3.