The UK’s Accelerated Settlement Taskforce is aiming to publish its report and recommendations on shortening the cycle to T+1 in January 2024, The TRADE’s sister title Global Custodian has learnt.
The taskforce filled with industry experts from across the securities services space was set up at the end of last year and had intentions to publish initial by December 2023 with a full report and recommendations will be made by December 2024. This was revised however, with the taskforce believing it could move straight to delivering a report by the end of this year.
Sources tell Global Custodian that this is now set to be delivered in January of the New Year, with the slight delay due to some sticking points around transition dates and specifying a date.
The initial date of the UK moving to T+1 put forward for discussion was April 2026, but the report is unlikely to specify that as a target due to a lack of consensus on achievability, sources said.
The debate around the timeline is coming down to whether to align with the EU or not.
Despite the UK wanting to ‘flex its post-Brexit muscles’ – as experts have said in the past – and move forward with its own timeline, there is very much still a view of the market being seen as “one location” with Europe from a trading perspective.
Experts believe it could be inconvenient to have to different transition dates and there is a “strong lobby of firms that say ‘let’s do it as Europe plus the UK together’”, a source said.
If April 2026 was a designated date by the UK, this would be an enormous task for the EU given the number of markets and market infrastructures involved.
Earlier this year The Association for Financial Markets in Europe (AFME) established an industry taskforce on the move to a one-day settlement cycle in Europe.
Its own taskforce is looking to assess two key questions: firstly, whether Europe should follow the US in the move to T+1, and secondly, if so, how and when the potential move should happen.
At present, talk is rife about Europe potentially considering a jump straight to T+0, however multiple Global Custodian sources have voiced their disapproval for such a notion.
In March this year, Adam Farkas, chief executive of AFME, said: “With the US having announced its intention to move to T+1 settlement by May 2024, the discussion on whether Europe should follow suit has become more pressing. Addressing this important topic will require a collaborative approach, and therefore all impacted stakeholders are encouraged to join the industry taskforce.”
As for the UK, once the taskforce presents its report, the ultimate decision will come down to HM Treasury as they set the agenda as part of last year’s Edinburgh reforms.
As such, the new Economic Secretary to the Treasury, Bim Afolami – who was appointed on 13 November 2023 – will be involved in the discussions going forward. He took over from Andrew Griffith who was previously Economic Secretary to the Treasury between 27 October 2022 and 13 November 2023.
With the situation complex, a lack of clarity in Europe, a change at the Treasury position and, ultimately, different types of organisations and parties involved in the decision, there is no firm decision across the UK and Europe at present. However, for the former, there is certainly a drive to deliver structural improvements to the market and make it a more efficient and competitive market.