October 2027 may seem like a long way from now, but there is much to be done for T+1 transition and market participants should not delay. This was the overarching message behind Mark Francis’ speech at the recent industry event organised by the UK Accelerated Settlement Taskforce (AST). The interim director of wholesale markets sell-side at the Financial Conduct Authority (FCA) took to the stage to outline an action plan for market participants and the FCA’s approach to supporting the industry.
None are exempted
“All firms that participate in wholesale markets are likely to be impacted in some way, from banks, to asset managers, to platforms and corporates,” Francis reminded his audience. He proposed four “must-dos” for entities preparing for T+1 transition: read the AST report, plan early, budget to execute the plan, and act to implement and test the changes.
Beyond a roadmap of technical and operational recommendations, The AST report also sets out expected behaviours under a code of conduct for firms. Preparing early is one of them. Operational recommendations call on firms to consider “their own processes and what may need to change to facilitate accelerated settlement” and take advantage of “appropriate innovations in automation which may bring greater efficiency through increased settlement speed and accuracy”. Budgeting activity for these changes should happen this year.
Support system
In supporting the industry’s transition, the FCA is taking a three-prong approach: engagement with firms, communication, and market monitoring.
A part of the authority’s communication strategy includes its new T+1 webpage, which Francis describes as a “one-stop shop” to promote T+1 awareness. In its supervisory capacity, the FCA expects firms to meet its expectations on preparedness, align their activities with the UK T+1 code of conduct, and be open with their transition plans and any barriers they may face.
