The UK’s Financial Conduct Authority (FCA) has released a comment expressing that it welcomes a statement supporting T+1 settlement of trades in funds. The authority emphasises that faster settlement will support the growth of the UK market and make it more competitive by improving efficiency and liquidity. It encourages fund managers to move to at least a T+2 settlement cycle by the T+1 deadline, 11 October 2027.
The original statement was jointly released by the Investment Association, Personal Investment Management and Financial Advice Association, as well as the Alternative Investment Management Association.
FCA recognises that “operational practicalities of fund settlement will not allow all authorised fund managers to offer T+1 settlement for units in funds”. It therefore recommends that for UK authorised funds and schemes investing predominantly in markets operating on T+1 settlement, achieving at least T+2 settlement “would be in investors’ interest. Funds currently operating on T+4 settlement “should consider carefully how an extended gap between market settlement and fund unit settlement would affect investors”.
The authority encourages fund managers not to go for T+2 settlement unless there are “strong justifications” for doing so. It writes, “Fund managers should determine what’s required to move to a T+2 settlement cycle in October 2027 and plan early to deliver this transition.”
