Jim Kaye, Executive Director at the FIX Trading Community
Next year will be the year of preparation. Market participants’ readiness for key milestones, like the anticipated go-live of the European consolidated tape (CTP) in 2025 or the transition to T+1 settlement in the UK/EU in 2027, will be critical to ensure long-term success. Whilst these turning points may seem far off, the time to prepare is now.
The focus will be on industry-wide initiatives currently underway, such as the various European CTPs, which will progress through selection processes in 2025, and the shift to T+1 in the UK and Europe. Whilst drawing lessons from the US T+1 rollout this year can provide guidance, the unique complexities of cross-border markets, spanning multiple currencies and infrastructures, present new challenges – requiring bespoke strategies.
Other areas of focus set to redefine the industry landscape include the continued adoption of AI in trading applications, the growth of tokenised securities and digital currencies, the electronification of securities lending, the move toward a real-time middle office and the standardisation of carbon emissions.
George Rosenberger, head of NYFIX, Broadridge Trading and Connectivity Solutions
The global financial industry is evolving rapidly, and 2025 will be a pivotal year as firms prepare for the EMEA region’s adoption of a T+1 settlement cycle, slated for 2027. Just like the US, this shift to a shorter settlement period demands significant operational and technological adjustments across markets to mitigate settlement risk and enhance efficiency.
One of the key challenges facing firms is the need for faster and more accurate trade matching. Under the current T+2 cycle, discrepancies in trade details can often be resolved with minimal impact. However, T+1’s compressed timeline leaves little room for errors or delays. Without the right solutions, these inefficiencies could lead to increased fails and heightened operational risk.
Real-time post-trade matching is emerging as a critical enabler in addressing these challenges. Automated systems can instantly validate trade details, flag mismatches, and facilitate near-instant corrections. This eliminates the reliance on manual intervention, which is prone to delays and errors, particularly when managing cross-border transactions or multiple counterparties.
As firms in the EMEA region ramp up investments in automation and operational resilience, 2025 will be a year of strategic groundwork. Those who act now to streamline post-trade processes and embrace real-time solutions will gain a competitive edge in the new T+1 era.
Daniel Carpenter, chief executive officer, Meritsoft, a Cognizant company:
Next year will need to be a year of action from financial institutions looking to prepare themselves for the monumental shift to T+1 settlement in the EU, UK, and Switzerland. We’ve learned over the years, with CSDR in the EU and T+1 in the US, that the implementation of tactical workarounds to manage settlement operations leads to higher costs and inefficiencies over the long term. For example, with CSDR in the EU, we’ve observed that some banks are willing to treat tens of millions of euros in penalties on failed trades as a cost of doing business rather than invest in systems to better manage their settlement fails. This is not sustainable.
Market participants in Europe should be starting now to proactively put in place solutions that enable them to not only better handle the operational activity for failed trades but reduce the total volume of fails. We believe market participants should implement a more strategic approach to trade settlement operations, leveraging AI capabilities to both identify at risk of failing trades in near real-time, as well as propose resolutions automatically.
Lisa Danino-Lewis, chief growth officer, CLS
In 2024, we’ve witnessed a continuation in the buy-side’s emphasis on adhering to best practices for mitigating settlement risk to meet regulatory expectations and to ensure robust risk management practices. As a result, CLSSettlement has experienced notable growth from the fund community, with nearly 80% of top-tier investment managers now accessing the service.
The transition to a T+1 settlement cycle in North America this year highlighted the need for efficient and automated processes both pre- and post-trade, fostering a broader conversation on optimising post-trade workflows to handle growing complexities. This conversation is especially relevant as cross-border transactions grow in volume and as asset managers expand their investment in international markets. Looking ahead to next year, we anticipate that the buy-side will maintain a strong focus on best practices for FX risk mitigation, particularly in response to market volatility stemming from ongoing geopolitical risks and the continued trend for FX to be traded as an asset class.