Regulators from the UK and EU struck a united tone last week as the EU, UK and Switzerland unveiled their joint testing plan for the move to T+1 settlement, emphasising shared objectives, uneven industry readiness, and the need for accelerated action ahead of the 11 October 2027 deadline.

Speaking at the launch, Heather Pilley, technical specialist, Capital Markets, representing the UK’s Financial Conduct Authority (FCA), and Karole-Anne Sauvet-Frot, senior policy officer, Markets Department & Coordinator of the T+1 project from the European Securities and Markets Authority (ESMA), outlined both the challenges and the opportunities of the transition and why the next step, T+0 is a long way off.  

Different approaches, same destination

Despite long‑standing characterisations of the UK as “principles‑based” and the EU as “rules‑based,” the event was a platform for convergence.

“The important point to emphasise is we are all aiming for the same outcomes,” Pilley said. “Our more principles‑based approach does not impede us from taking action where we see a threat to the market.” 

Sauvet-Frot echoed the sentiment, noting that the EU’s 27‑member structure requires more formalised frameworks, but the direction of travel remains consistent: “Different approaches, but basically the same outcome is what we need to search for.”

Patchy readiness and 2026 priorities

Both regulators highlighted concerns emerging from ValueExchange’s Accelerated Settlements: T+1 in the EU & UK (Q3 2025 Pulse Survey), which showed that many firms – particularly smaller asset managers and insurers – do not expect to meet the requirement to complete allocations and confirmations on trade date.

“A sizable number of respondents said they expected not to achieve compliance… That is the key concern,” Pilley noted.

The FCA will prioritise oversight of small and mid‑sized asset managers in 2026, taking what Heather described as a “more intrusive approach” to assessing preparedness.  

ESMA, meanwhile, is focused on transparency across the chain – especially dependencies on custodians, FMIs and service providers – and on accelerating engagement among smaller firms.

Both regulators pointed to lessons from the US transition, where firms that invested in automation saw lower long‑term costs and fewer settlement fails.

Settlement discipline: No softening expected

Despite industry calls for flexibility, ESMA signalled that suspension of CSDR cash penalties around go‑live is unlikely.

“Nothing is decided yet… but this is really not something to be expected,” Sauvet-Frot said.

The message: readiness, not regulatory relief, will determine firms’ experience of the transition.

T+0: Evolution or revolution?

Both regulators acknowledged growing interest in same‑day settlement — but stressed that the industry is nowhere near ready.

Sauvet-Frot underscored the definitional challenge: “What is T‑0 exactly? Is it batches? Atomic settlement? There is first a need to work on the definition.”

Pilley framed the shift as a step‑change: “The move from T‑2 to T‑1 is an evolution… But T‑0 could lead to challenges for which there are no real post‑trade solutions available now.”

Both pointed to digital asset sandboxes and the EU’s DLT pilot regime as potential future enablers – but not near‑term solutions.

What Success Looks Like

Regulators outlined a clear vision for a successful transition:

  • Firms meeting legislative and supervisory expectations
  • A smooth market‑wide transition
  • Improved settlement efficiency
  • Tangible benefits such as reduced risk and lower margin requirements

Pilley cited US data showing a 29% reduction in NSCC clearing fund requirements, translating into $3.7 billion in savings — the kind of outcome regulators hope to replicate.

 Both speakers closed with the same warning: the biggest risk is lack of preparedness, and the biggest mitigation is communication.

“T+1 is a network exercise… Participants are only as strong as the weakest in the settlement chain,” Heather said.

Karole‑Ann agreed: “Time is of the essence now.”