UK T+1 Settlement: FCA Expectations, Compliance Risks and What Asset Managers Must Do Before October 2027

The UK financial markets are moving to T+1 settlement for securities trades on 11 October 2027. From that date, most transferable securities traded on UK trading venues and settled through UK central securities depositories (CSDs) must settle within one business day.

While this change is being led by industry through the Accelerated Settlement Taskforce (AST), it is now firmly embedded in the regulatory framework, and the FCA has made clear that firms should already be planning and implementing the necessary changes.

For asset managers, alternative investment firms and investment managers, T+1 is not simply an operational change. It is a governance, compliance, outsourcing and operational resilience issue that will form part of ongoing FCA supervision.

What is Changing?

From October 2027, transferable securities traded on UK trading venues will need to settle on a T+1 basis, unless specifically exempt.

In practical terms, this means:

• Trades executed on Day T must settle by the end of Day T+1

• Timelines for allocations, confirmations, funding and securities availability are significantly compressed

• Manual workarounds that were tolerable under T+2 will no longer be viable

• Settlement failures are more likely where processes are not automated or well-governed

The transition is being coordinated by the AST, which published its T+1 Implementation Plan in February 2025 and continues to issue guidance and progress updates for UK market participants.

The FCA's Position on T+1

Although the transition is industry-led, the FCA has been explicit about its role and expectations.

The FCA:

• Supports the move to T+1 alongside HM Treasury and the Bank of England

• Expects firms and trading venues to be fully prepared ahead of October 2027

• Will continue to supervise firms’ readiness and monitor market preparedness

• May take regulatory action where firms are not adequately prepared and market integrity is at risk

In a Dear Compliance Officer letter to asset management and alternative firms, the FCA highlighted concerns that some small and mid-sized firms may not yet fully understand the scale of the change. The FCA has encouraged firms to take proactive steps now and warned that it may ask firms to explain their T+1 plans as part of ongoing supervision.

What Firms Should Already Have In Place

According to the FCA, firms should already have:

• Engaged with the AST’s recommendations and identified those relevant to their business

• Completed a T+1 project plan

• Secured the budget and resources needed to deliver that plan

At this stage, T+1 should no longer be treated as a future or exploratory issue.

What Firms Should Be Doing During 2026

The FCA has been clear that 2026 is the year of implementation. Firms should now be making substantive changes to systems, processes and governance arrangements and be ready to test those changes by the end of the year.

1. Systems and Processes

Firms should be:

• Implementing changes to trading, clearing and settlement systems

• Reducing reliance on manual processing

• Introducing appropriate automation to support faster settlement and increased volumes

Automation is not just about efficiency; it is also about resilience, particularly during periods of market stress.

2. Allocation, Confirmation and Settlement Discipline

Several of the AST’s recommendations are considered critical to successful T+1 implementation and have deadlines at the end of 2026. Firms should ensure they can demonstrate:

• Allocation and confirmation processing completed by 23:59 on trade date (T)

• Updated policies and procedures reflecting tighter settlement timelines

• Reviewed contractual terms and settlement cut-offs

• Adoption of market practices such as partial settlement, autoshaping and Hold & Release, where appropriate

Industry data suggests that a material proportion of firms remain at risk of missing these milestones.

3. Third-Party Outsourcing Arrangements

T+1 settlement has sharpened the FCA’s focus on third-party dependencies and outsourcing risk.

Firms should:

• Map their end-to-end settlement chain, including custodians, administrators, brokers and FMIs

• Understand where delays, manual interventions and failure risks arise

• Engage early with service providers on revised cut-offs and expectations

• Evidence oversight, challenge, escalation routes and contingency planning

The FCA has been explicit that firms remain fully accountable for regulatory compliance, even where settlement activities are outsourced.

4. Securities Lending and Inventory Management

Firms engaged in securities lending should ensure they can support timely recalls under T+1, including:

• Prompt notification to intermediaries when securities need to be recalled following a sale

• Processes that minimise settlement failures caused by delayed recalls

More broadly, firms should review inventory and liquidity management arrangements to ensure cash and securities are available in the right place, at the right time, to support T+1 settlement.

A Simple Countdown to T+1

The FCA’s expectations can be summarised as follows:

• 2026: Create a project plan, secure budget, and implement changes to systems and processes

• 2027: Test and be ready for go-live in October

Firms that are not prepared should expect increased FCA scrutiny as the deadline approaches.

Final Thoughts

The move to T+1 settlement is now a fixed feature of the UK regulatory landscape. While the transition is industry-led, the FCA has made clear that it will hold firms accountable for their readiness.

For asset managers and alternative firms, T+1 is not just an operational change, it is a matter of governance, oversight and operational resilience.

The key question firms should be asking now is:

Could you confidently explain your T+1 readiness to the FCA today?