T+1 Transformation: The Strategic Roadmap Reshaping European Securities Settlement

A New Era for European Settlement: The industry-led blueprint for post-trade transformation and operational resilience – The High-Level Roadmap to T+1 Securities Settlement represents the most comprehensive industry-led initiative to transition European financial markets from T+2 to T+1 settlement by October 11, 2027. This report, produced by the EU T+1 Industry Committee comprising 20 associations and industry experts, establishes the operational framework for one of the most significant post-trade transformations in European capital markets history. This high-level roadmap represents the first phase of a multi-step transition to T+1. Continued collaboration among market participants, public authorities, and international counterparts will be essential to refine market practices, conduct industry-wide testing, and monitor post-go-live performance beyond October 2027. It underscores the need for cross-jurisdictional cooperation—including ongoing dialogue with the UK Accelerated Settlement Taskforce and the Swiss Securities Post-Trade Council—and emphasises automation, standardisation, and robust technological upgrades to achieve operational resilience.

Redrawing the Regulatory Map: Harmonising rules, redefining boundaries: The legal backbone of T+1– The T+1 cycle will apply to all secondary market transactions in transferable securities executed on EU trading venues and settling in EU-registered Central Securities Depositories (CSDs). Transactions outside this scope—such as OTC trades in non-listed instruments and certain derivatives flows—remain under review for potential market-conventional adoption of T+1. Key regulatory changes under consideration include:

• Amendment of Article 5(2) of the CSDR to fix the implementation date of T+1.
• Revisions to Commission Delegated Regulation (EU) 2018/1229, notably to update deadlines for trade allocations and confirmations.
• Updates to ESMA Guidelines on standardised procedures and messaging protocols under Article 6(2) of CSDR

Racing Against the Clock – Compressed deadlines, harmonised processes: The new rhythm of European settlement

A sequence of “gating events” with harmonised Central European Time (CET) deadlines is proposed to ensure timely settlement:

• 17:00 (T-Date): Deadline for securities lending recall notifications.
• 22:30 (T-Date): Central Counterparty end-of-day netting reports and settlement instruction release.
• 23:00 (T-Date): Completion of trade allocations and confirmations.
• 23:59 (T-Date): Final submission of settlement instructions to Securities Settlement Systems (SSS).
• 00:00 (Settlement Date): Opening of SSS and initiation of T2S C1S4 night-time settlement cycle.
• 15:00 (Settlement Date): Deadline for notifying returns of recalled securities.
• 15:30 (Settlement Date): Settlement deadline for recalled securities, 30 minutes before the DvP cutoff.
• 16:00 (Settlement Date): Harmonised Delivery versus Payment (DvP) cutoff for EUR and EEA currencies.
• 18:00 (Settlement Date): Harmonised Free of Payment (FoP) cutoff

Every Second Counts – Tactical imperatives for trading, clearing, settlement, and asset management under T+1

✅  Trading Phase: Trading venues and CCPs must optimise end-of-day processes to include trades up to 22:00, update rulebooks to default to T+1, monitor liquidity impacts across asset classes, and implement automatic shaping of large settlement instructions in cash bonds and repos.

✅  Matching & Confirmation: Promote straight-through processing by standardising electronic exchange of allocations and confirmations, mandating intraday transmission by 23:00, providing place-of-settlement data at allocation, and establishing an industry taskforce for SSI management.

✅  Clearing Phase: CCPs should compress end-of-day netting and reporting processes to meet the 22:30 deadline, and clearing members, settlement agents, and broker-dealers must align their workflows accordingly.

✅  Settlement Phase: Emphasise real-time and automated instruction processing, develop a single “gold standard” instruction format, enhance custodial reporting of free-of-allocation feedback (PSAF), and leverage dynamic cash and stock forecasting tools. Functionalities such as partial settlement, hold & release, auto-borrowing, netting, and auto-collateralisation should be universally available across CSDs and intermediaries.

✅  Asset Management: Encourage fund managers to target T+2 unit settlement cycles where feasible and seek clarity on cash-breach tolerances arising from settlement misalignments.

✅  Foreign Exchange (FX): Align FX trade processing and submission to CLS by 00:00 on Settlement Date to secure payment-versus-payment (PvP) settlement and minimise principal risk in FX transactions.

✅  Corporate Events: Synchronise key corporate action dates with the T+1 cycle and automate buyer protection and market claims processing to eliminate manual bottlenecks.

✅  Securities Financing Transactions (SFTs): Further analyse settlement optimisation, standardise pro-rata loan release practices, adopt triparty collateral tools, accelerate buy-side notification workflows, and automate recall and return instruction flows.

✅  Legal & Regulatory: Address national specificities and strive for harmonised insolvency frameworks across Member States to support uniform T+1 adoption

 

Critical Success Factors:

• Automation imperative: The roadmap emphasizes that manual processes will become incompatible with T+1 timelines
• Industry coordination: Success depends on unprecedented collaboration across 30+ European CSDs and diverse market participants
• Technology transformation: Real-time processing capabilities and enhanced connectivity are non-negotiable requirements
• Risk management: Settlement efficiency must be maintained at current levels (95%+) throughout the transition

From Compliance to Competitive Edge – Turning operational overhaul into strategic advantage

1. Operational Timeline Compression

The transition compresses post-trade processing windows by approximately 83% for cross-border settlements, fundamentally altering operational models across the European financial ecosystem. The standardized operational timetable establishes 11 critical “gating events” with harmonized Central European Time deadlines.

 

2. Technology and Automation Requirements

The roadmap mandates comprehensive automation across all post-trade processes, with particular emphasis on:

• Straight-through processing (STP) for 90%+ of settlement activities
• Real-time instruction processing replacing batch-based operations
• Enhanced exception management using automated identification and resolution systems
• Dynamic liquidity management tools for cash and stock forecasting

3. Market Infrastructure Harmonization

Critical infrastructure alignments include:

• DvP cutoff standardization at 16:00 CET across all European settlement systems
• FoP cutoff harmonization at 18:00 CET
• Settlement system opening by 00:00 on settlement date
• CCP process compression to 22:30 deadline for netting reports

4. Securities Financing Transaction Impact

SFTs face disproportionate challenges with the roadmap establishing:

• Standardized recall deadlines at 17:00 on trade date
• Return notification deadlines at 15:00 on settlement date
• Settlement deadlines for recalled securities at 15:30
• Potential exemption for SFTs from mandatory T+1 requirements under specific conditions

Blueprints for Every Player – Tailored strategies for banks, brokers, asset managers, and infrastructure providers

Banks and Financial Institutions

Banks should leverage the roadmap’s recommendations to implement comprehensive testing programs that address their role as critical market infrastructure providers. Key optimization strategies include:

• Multi-system integration testing covering core banking platforms, settlement systems, and client interfaces
• Liquidity management validation under compressed settlement windows
• Cross-border processing optimization for international client servicing
• Automated reconciliation testing to ensure accuracy under accelerated timelines

 

Broker-Dealers and Trading Firms

Broker-dealers can optimize their T+1 transition by focusing on trade lifecycle acceleration and client service enhancement:

• Same-day affirmation testing with automated allocation and confirmation capabilities
• Client communication system validation ensuring timely delivery of settlement instructions
• Risk management system updates for real-time position monitoring and margin calculation
• Prime brokerage integration testing with enhanced operational requirements

Asset Managers and Investment Firms

Asset managers should leverage the roadmap to optimize portfolio management processes and fund administration capabilities:

• Fund settlement cycle testing targeting T+2 cycles for open-ended funds where feasible
• Cross-border investment validation managing varying settlement cycles across jurisdictions
• Liquidity management enhancement with dynamic cash forecasting and automated funding
• Client reporting optimization for modified fund settlement communications

Market Infrastructure Providers

CSDs, CCPs, and other market infrastructures should implement comprehensive system modernization programs based on roadmap specifications:

• Settlement system timing alignment meeting harmonized cutoff requirements
• Enhanced functionality deployment including automated liquidity management facilities
• Real-time processing implementation supporting continuous instruction processing
• Industry-wide testing coordination facilitating comprehensive participant validation

Countdown to T+1 – Planning, testing, and validation: The phased journey to October 2027

2025 Strategic Planning and Design

Organizations should leverage 2025 for comprehensive planning and design activities that establish the foundation for successful T+1 implementation:

• Technology architecture finalization based on roadmap specifications and industry standards
• Process reengineering completion incorporating automation and exception management requirements
• Vendor selection and integration planning for enhanced T+1 capabilities
• Staff training and organizational development preparing teams for compressed operational windows

2026 Development and Testing Execution

The critical 2026 period should focus on intensive development and testing activities that validate T+1 capabilities:

• System implementation completion with full T+1 functionality deployment
• Internal testing programs validating end-to-end processing capabilities
• Process automation deployment achieving targeted straight-through processing rates
• Integration testing with counterparties ensuring seamless operational coordination

2027 Industry Validation and Go-Live Preparation

The final preparation year should emphasize industry-wide validation and operational readiness:

• Coordinated industry testing participation validating complex multi-party scenarios
• Shadow processing implementation building confidence through parallel operations
• Operational readiness validation ensuring teams and processes meet T+1 requirements
• Go-live preparation and support deploying enhanced monitoring and exception management

Seize the Momentum- How proactive preparation turns compliance into opportunity

Navigating the Minefield – Integration, cross-border risk, and regulatory hurdles on the road to T+1

1. Technology Integration Complexity: The roadmap acknowledges that European markets face unique challenges due to fragmented post-trade infrastructure across 30+ CSDs and multiple currencies. Integration costs range from €200,000 for small firms to over €35 million for large global custodians.

2. Cross-Border Settlement Risks: The compressed timeline particularly impacts cross-border transactions, where coordination across multiple time zones, currencies, and jurisdictions creates operational vulnerabilities. The roadmap emphasizes the need for enhanced FX processing and CLS settlement coordination.

3. Securities Financing Transaction Disruption: The transition will force a significant portion of the repo market to same-day (T+0) settlement, creating substantial intraday liquidity consumption challenges. The roadmap proposes additional batch settlement cycles at 12:00 to mitigate these risks.

4. Regulatory Compliance Alignment: The roadmap coordinates with multiple regulatory changes including CSDR amendments, Commission Delegated Regulations, and ESMA Guidelines, requiring precise timing of implementation across 27 EU and 3 EEA states.

 

The T+1 Ripple Effect – Market structure, innovation, and risk management in a post-T+1 world

Market Structure Evolution: This roadmap represents more than an operational change—it constitutes a fundamental evolution of European capital market structure. The emphasis on automation and real-time processing will accelerate the digital transformation of post-trade infrastructure, potentially consolidating market share among technologically advanced participants while challenging traditional manual-based operators.

Competitive Positioning: The alignment with US and UK T+1 implementation creates a strategic opportunity for European markets to enhance global competitiveness. However, the complexity of European market structure—with multiple CSDs, currencies, and regulatory frameworks—presents both challenges and opportunities for differentiation.

Innovation Catalyst: The T+1 transition serves as a catalyst for broader innovation in post-trade services. The roadmap’s emphasis on automation, standardization, and enhanced connectivity will likely accelerate adoption of advanced technologies including artificial intelligence for exception management and blockchain for settlement finality.

Risk Management Transformation: The compressed settlement cycle fundamentally alters risk management paradigms, requiring enhanced real-time monitoring capabilities and automated risk mitigation tools. Organizations that successfully implement these capabilities will gain significant competitive advantages in the post-T+1 environment.

v Capital Commitment: Budget $200K–$36M+ for automation (scaling by size).

v Governance: Establish T+1 task forces with C-suite oversight.

v Cross-Jurisdictional Sync: Align with UK (Accelerated Settlement Taskforce) and Swiss timelines.

v Risk Mitigation:

• Run parallel T+1/T+2 systems from July 2027.
• Deploy AI-driven fail prediction.

v Regulatory Engagement: Proactively address national insolvency mismatches (LR-02).

Key Insight: The roadmap’s “adhere or explain” principle allows flexibility but mandates transparency. Firms choosing deviation must quantify operational/financial impacts to stakeholders.

 

Unfinished Business – Contingency, fragmentation, and the ongoing quest for harmonisation: The roadmap acknowledges several areas where additional risk mitigation measures need development:

✅  Contingency Planning: While the framework mentions the need for “contingency plans that may be necessary given the processes,” specific contingency procedures for operational failures remain to be detailed.

✅  Cross-border Settlement Risks: The complexities of multiple currencies, time zones, and jurisdictions create additional operational challenges that require ongoing analysis and specific risk mitigation strategies.

✅  Market Fragmentation Prevention: Coordination mechanisms to prevent fragmentation if different jurisdictions implement T+1 at different times remain under development

 

Measuring the Metamorphosis – The benchmarks and KPIs that will define T+1’s legacy: The roadmap’s success requires clear performance metrics and continuous optimization processes:

Critical Success Indicators:

• Settlement efficiency maintenance at 95%+ levels throughout transition
• Straight-through processing achievement reaching 90%+ automation rates
• Exception resolution time meeting compressed T+1 operational windows
• Client satisfaction maintenance ensuring service quality during transition

The T+1 transition is a $3.9 trillion operational metamorphosis requiring unprecedented collaboration. Success hinges on:

• Automation at Scale: Eliminate manual touchpoints by 2026.
• Liquidity Resilience: Dynamic tools for compressed settlement.
• Testing Rigor: Treat 2027 testing as a full-scale war game.

Firms that leverage the roadmap’s phased approach—prioritizing 2025 audits, 2026 integration, and 2027 validation—will transform settlement compression from a compliance burden into a competitive edge.

The roadmap’s success will ultimately depend on industry-wide commitment to the “adhere or explain” principle and unprecedented coordination across the European financial services ecosystem. Organizations that begin comprehensive preparation now and invest appropriately in technology and process transformation will be best positioned to capitalize on the enhanced efficiency and reduced risk profile that T+1 settlement delivers.

Market participants who strategically leverage the roadmap’s comprehensive recommendations, implement sophisticated testing and deployment strategies, and maintain focus on operational excellence will be best positioned to capitalize on the enhanced efficiency and reduced risk profile that T+1 settlement delivers to European financial markets.

How Onepoint can Help?

• T+1 Readiness Assessment: Diagnostic review of current post-trade processes, systems, and controls to identify gaps and readiness for T+1 settlement.
• Process Automation & Technology Integration: Implementation of automated solutions for trade matching, confirmation, allocation, and settlement to minimize manual intervention and reduce operational risk.
• Change Management & Training: End-to-end support for operational change, including staff training, workflow redesign, and change impact analysis to ensure a smooth transition.
• Vendor & Counterparty Coordination: Facilitation of industry-wide coordination, including integration with custodians, brokers, and third-party vendors to ensure alignment and interoperability.
• Regulatory Compliance Advisory: Guidance on CSDR and ESMA requirements, documentation updates, and ongoing compliance monitoring for T+1 settlement.
• Testing & Implementation Support: Management of parallel testing, dry runs, and phased implementation to mitigate risks and ensure operational resilience during the transition period.
• FX and Cross-Border Settlement Solutions: Specialized support for FX processing and cross-border trades, addressing the unique challenges of shortened settlement cycles.
• Post-Transition Optimization: Continuous process improvement and post-implementation reviews to capture efficiencies and ensure sustained compliance and performance.