Chancellor Rachel Reeves has confirmed that the UK will move to a ‘T+1’ standard for settling securities trades from 2027.
She is meeting with chiefs of investment banking and asset management firms today to discuss the overhaul.
The government has set 11 October 2027 as the date for the UK to transition to a one-day settlement system for trades.
This means all information will need to be checked and cash handed over within one working day of a trade being made.
The UK market currently works on a two-day time frame called T+2. Other markets like the US, have already made the shift to the shorter settlement timeframe.
While some were nervous about the potential ramifications of the US transition to T+1 last year, the transition did not affect capital markets.
Europe has yet to set a deadline for the transition to T+1, while China currently operates on instant same-day settlements or T+0.
Meeting with chiefs this morning from City giants like JP Morgan, Blackrock, Abrdn and Goldman Sachs, Reeves said that faster settlement would support growth in the UK and modernise British capital markets.
“I am determined to go further and faster to drive growth and put more money into people’s pockets through our Plan for Change,” said the Chancellor.
“Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.”
A report from a government taskforce last year said the UK should make the transition no later than 2027.
Reeves said today that the government had accepted all recommendations from the taskforce and confirmed it would bring forward legislation to implement the changes.
“We welcome the UK government’s commitment to move to a T+1 settlement cycle in October 2027,” said Morgan Stanley international CEO Clare Woodman.
“The shift to a shorter settlement cycle will generate market efficiencies supporting the competitiveness of UK markets.”
“This direct and visible support from the public authorities is both key and very welcome,” added Andrew Douglas, who chaired up the government taskforce.
“This plus the anticipated scrutiny of firms’ preparations by the supervisory authorities should encourage and facilitate participants securing the necessary funding in this year’s budget cycle for the operational changes they will need to make in 2026 in order to be ready for October 2027.”