Moving the heart of the business to T+0

DEEP LOOK | The packed T+1 track at PostTrade 360° 2025 focused on the issues that would form the business case for even faster settlement. In the first of a two‑part report on the questions to address in any move to T+0 we surface the impacts on operations teams.

The real cost of speed: Operations under pressure

Accelerated settlement cycles promise efficiency, but they also redraw the landscape in real time. Shorter cycles may free up liquidity faster, yet they simultaneously demand same‑day funding discipline that can’t be met by simply adding people to the process. The shift exposes a deeper truth: readiness now depends on technical coordination and automation capable of keeping pace with the new settlement clock.

“The need for real-time exception management and reconciliation are often highlighted as the big impacts to operations in a move to same day settlement but these are already present in T+1 and need to be addressed by investing in preventative controls around SSI quality and real-time data validation from trade execution onwards,” says Mack Gill, head of securities processing at FIS.

Market fragmentation risks rise as local practices collide

Accelerated settlement does not play out uniformly across markets: local settlement practices, sub-custody models, cut-off times, liquidity arrangements and domestic workflows vary significantly and become far less forgiving as timelines compress.

As settlement cycles approach real-time, interoperability between central securities depositories and financial market infrastructures becomes critical explains Francisco Béjar, head of custody at SIX.

“A one-size-fits-all approach risks amplifying existing disparities between large global players and local or regional firms,” he says. “With deep knowledge of domestic market practices, local CSDs and FMIs can translate global settlement ambitions into workable, market-specific processes, providing support to both domestic and international firms and preventing market fragmentation.”

No room for manual workflows in a zero‑day world

With T+0 there is no buffer for manual processes, email chains or spreadsheet-based interaction, so the risk of breakdown rises sharply. Firms would need a real-time or close to real-time understanding of the settlement status of all trades to ensure issues are flagged and dealt with early to avoid fails that are both financially and reputationally costly, with manual intervention limited to trades that are too difficult to automate.

“If a firm is taking the move to T+1 as a strategic opportunity to upgrade systems and automate, the lift to T+0 will be minimal if the system can handle straight through processing,” says Daniel Carpenter, CEO of Meritsoft.

Synchronisation challenges in intermediated markets

More people may be required though according to Gary O’Brien, head of bank and broker segment strategy, Securities Services at BNP Paribas, who says the number of staff involved per settlement in the Stock Connect market (T+0) is much greater than for the traditional Hong Kong market, which operates on a T+2 basis.

“Market commentators have suggested that moving to T+0 from T+1 would likely require a significant review and rework of current market practices and framework, which might be in terms of creating a centralised window across participants to a trade to give simultaneous visibility of each party’s current processing status on a transaction,” he observes.

In an environment of intermediation it takes time for each party in the chain to conduct their own responsibilities and as such synchronisation and time demands become increasingly challenging in a T+0 environment.

“Custodians already support T+0, which requires an element of pre-work and special handling,” says Adrian Whelan, global head of market intelligence at Brown Brothers Harriman. “However, if it was the norm for all securities that would require a reworking and reordering of all pre- and post-trade operating mechanics.”

Funding, FX and the liquidity squeeze

A further challenge lies in trade funding, particularly if the underlying investor is holding a different currency. It is not uncommon for buy-side firms to review the FX requirement of their end-of-day trades with a view to executing the relevant FX transactions in time to settle the securities in the traded currency. A move to T+0 trading would force a change into the way FX is considered.

Furthermore, FX is one of the most netted instrument types in financial services explains Tom Casteleyn, EMEA head of custody at JP Morgan. “Although FX executed to settle securities represents only a fraction of this total, a move away from netting will have onward impacts to intraday liquidity and settlement,” he explains.

Trade price formation could also be impacted. Executing brokers and liquidity providers don’t generally hold security inventory at the point they agree to buy or sell a security for a client and will commonly rely on liquidity tools such as securities lending to provide market liquidity to clients.

“With a move to T+0 settlement there would be far less time to access and therefore onward provide this liquidity to the market, which could impact on spreads unless an alternate model is found,” adds Casteleyn.

Asset servicers would have to establish (or enhance) robust ‘follow the sun’ models to manage any non-STP issues, both in trade matching and in settlements – including removing manual recalls from securities lending.

The industry would also have to transition to a standards-driven, high STP approach to corporate actions says Chris Rowland, head of custody, digital and fund services product at State Street. “Currently, STP rates for corporate actions are below 75%,” he notes. “With no buffer in a T+0 settlement cycle, the risk of missing record dates and election deadlines could result in more losses.”

Intraday liquidity and the buy‑side funding puzzle

With same-day settlement, firms must have cash and securities available immediately rather than having overnight to arrange funding, explains Phil Flood, global business development director for regulatory and STP services at Gresham.

This will require larger cash buffers, more sophisticated intraday liquidity management and tighter coordination with custodians and clearing banks. Smaller firms, in particular, may find this difficult to manage.

An alternate perspective is that the main challenges to T+0 are not operational but rather lie in portfolio management – specifically, how T+0 will affect the use of cash and cash-like sources of liquidity in an environment where all trading needs to be pre-funded.

Automation or bust: Why manual exceptions can’t survive

No manual process would survive in a T+0 world – but that is not an insurmountable task since there are many financial markets that already operate this way and many solutions that are set up to operate in a T+0 environment.

T+0 only works if market infrastructure providers that currently operate on legacy siloed ledgers can move in step, making industry collaboration the name of the game suggests Vikash Rughani, head of product design at OSTTRA.

Key cost drivers include:

• Continuous processing infrastructure

• Real‑time data management

• Automated reconciliations

• AI‑driven risk prevention

• Resilience and security

• Liquidity and funding impacts

The investment divide: Big‑bank overhauls vs. mid‑tier incrementalism

“A single transformation model does not suit all market participants,” observes Pam Samrai, global head, buy-side post trade product at Bloomberg.

Larger institutions typically have greater appetite, capital allocation and strategic capacity for end-to-end transformation programmes. Mid-tier and smaller firms tend to pursue incremental change.

“What remains consistent is the direction of travel,” she concludes. “Increased automation, reduced manual touchpoints and structurally enhanced post-trade resilience.”