Policy paper

Policy note – Mandating T+1 settlement in the UK

Updated 20 November 2025

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This publication is available at https://www.gov.uk/government/publications/accelerated-settlement-t1/policy-note-mandating-t1-settlement-in-the-uk

1. Introduction

When securities such as shares and bonds are traded on financial markets, there is typically a time gap between the ‘trade date’ – the day on which a buyer and seller agree to the terms of the trade – and the ‘settlement date’ – the day on which the buyer receives the securities they have purchased and the seller receives the proceeds.

This gap is known as the ‘settlement period’, or ‘settlement cycle’. During this time period several processes take place, such as confirming that the buyer has sufficient funds and that the seller has the securities to complete the trade, and details are exchanged between the parties to facilitate settlement. This aims to avoid the possibility that the trade could fail to settle. However, this time gap also exposes both parties to risk.

The settlement period has shortened in recent decades in line with the capabilities of modern technology. Reducing this gap further would reduce counterparty risk and encourage more efficient processing by market participants, which in turn will reduce costs and make markets more efficient overall. Faster settlement may also encourage increased use of automation to replace manual processes.

Since 2014, the UK (along with the European Union) has required most securities trades to settle by ‘T+2’, i.e. two days after the trade date. Other jurisdictions such as the US have moved to, or are exploring, a faster ‘T+1’ standard, where trades are required to settle by the day after they are agreed.

Following the work of the industry-led Accelerated Settlement Taskforce (AST) and its Technical Group, the government committed to legislate to mandate T+1 as the standard settlement period in the UK from 11 October 2027[footnote 1].

The draft statutory instrument (SI) published alongside this note illustrates how the government plans to deliver this. The government has published this draft SI in advance of laying it in Parliament, to aid stakeholder preparations by providing clarity on how the T+1 requirement is intended to apply.

This is a draft SI and should not be treated as final. The drafting approach, and other technical aspects of the proposal, may change before the final instrument is laid in Parliament. The government welcomes any comments on the draft SI by 27 February 2026.

Pending any technical comments received on the draft, the government intends to lay the final SI in advance of 11 October 2027, allowing ample time for appropriate legislative processes and Parliamentary scrutiny to take place beforehand and to provide early certainty for the sector.

1.1 This policy note

This note sets out the existing legislation which applies in this area and then explains the approach that has been taken in the draft legislation and the practical effect it will have. It also explains the government’s position on some issues that have not been addressed in the legislation.

2. Existing legislation

The current T+2 requirement is set out in Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012[footnote 2], commonly known as the UK Central Securities Depositories Regulation (UK CSDR).

Article 5(1) of UK CSDR requires that market participants in a securities settlement system (such as CREST, the UK securities settlement system operated by Euroclear UK and International (EUI)) must settle their transactions in transferable securities by the ‘intended settlement date’.

Article 5(2) states that, for transactions in transferable securities which are executed on a UK trading venue, ‘the intended settlement date shall be no later than on the second business day after the trading takes place’. This is the current ‘T+2’ requirement.

The term ‘transferable securities’ is defined under point (24) of Article 2(1) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012[footnote 3], commonly known as the UK Market In Financial Instruments Regulation (UK MIFIR). It covers securities which are ‘negotiable on the capital market’, including shares and bonds.

The government understands that the AST consider that derivative contracts will generally fall outside the scope of article 5(2). This may be for a number of reasons including that:

  • The derivative contract is not a ‘transferable security’ as defined in UK MiFIR
  • The derivative contract is not executed on a UK trading venue or settled within a UK CSD
  • The transfer of transferable securities related to a derivative contract should not be regarded as a separate and independent ‘transaction’ from the related derivative contract for the purposes of article 5(2) (such as physical settlement of a derivative contract or title transfer collateral arrangements to cover exposures under a derivative contract).

Any move towards T+1 for such flows is expected to instead develop as a matter of market convention.

Article 5(2) sets out exceptions to the T+2 requirement, which are:

  • Transactions which are negotiated privately but executed on a UK trading venue
  • Transactions which are executed bilaterally but reported to a UK trading venue
  • The first transaction where the transferable securities concerned are subject to initial recording in book-entry form

The competent authority is given responsibility for ensuring that the T+2 requirement is applied. In this case, this is the Financial Conduct Authority (FCA) for trading venues and any participant in a securities settlement system, and the Bank of England (the Bank) for central counterparties (CCPs) and central securities depositories (CSDs, including EUI).

3. The Central Securities Depositories (Amendment) (Intended Settlement Date) Regulations 2026

3.1 Legislative approach

The draft SI contemplates the SI being made using the power under section 3(1) of the Financial Services and Markets Act 2023 (FSMA 2023). This transitional amendment power enables the government to modify certain pieces of assimilated EU law relating to financial services that is awaiting revocation and replacement. UK CSDR is included in the list of relevant pieces of legislation for this purpose in Schedule 1 of FSMA 2023.

The SI amends the intended settlement date in UK CSDR Article 5(2), stating that this date should be ‘no later than the first business day after the day on which trading takes place’. This requires market participants to settle transactions in transferable securities which are executed on a UK trading venue by T+1 at the latest.

The new drafting also provides additional clarity on what is meant by ‘T+1’, clarifying that this means the business day after the day on which trading takes place.

As is currently the case, the FCA will be responsible for ensuring that the T+1 requirement is applied by trading venues and CSD participants, while the Bank will be responsible for ensuring it is applied by CCPs and CSDs (including EUI).

The SI maintains the current exceptions to this requirement for transactions which are negotiated privately and executed on a UK trading venue and transactions which are executed bilaterally and reported to a UK trading venue. It also maintains the exception for the first transaction where the transferable securities concerned are subject to initial recording in book-entry form.

The SI introduces an exemption for securities financing transactions (SFTs), as recommended by the AST. The government agrees that it is important that SFTs are exempt from the T+1 requirement so that they can be used flexibly by firms to support their liquidity management and funding requirements.

The SI specifies that the following types of SFTs are exempt:

  • Securities or commodities lending
  • Securities or commodities borrowing
  • Buy-sell back transactions
  • Sell-buy back transactions
  • Repurchase transactions

These terms are defined in Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012[footnote 4], commonly known as the UK Securities Financing Transactions Regulation (UK SFTR).

It is worth noting that the exemption applies to these types of SFTs to the extent that they are transactions in transferable securities – meaning that other types of transactions included within the definitions under UK SFTR, such as trades in commodities or guaranteed rights, are not relevant for the purposes of the exemption and these types of transactions remain out of scope. It was also not considered necessary to provide an exemption for margin lending transactions, as these are cash loans rather than transactions in transferable securities (though the loaned cash would then typically be used to purchase a transferable security, and this purchase could be in scope of the T+1 requirement).

The SI is scheduled to come into force on 11 October 2027. On this date, the T+1 requirement will become law under UK CSDR.

3.1.1 Issues not addressed in the legislation

The AST recommended temporary exemptions from the T+1 requirement for Eurobonds and exchange-traded products (ETPs) in the event that the UK moved to T+1 before the EU. As the UK and the EU are both committed to moving to T+1 on 11 October 2027, it was not considered necessary to provide these temporary exemptions in this SI.

The AST also recommended temporary exemptions for other non-UK fixed income securities that settle in the UK, until the ‘home’ jurisdiction moves to T+1. However, this represents a very small number of transactions, and in most cases the home jurisdiction is an EU member state so an exemption would not be necessary. It was therefore not considered proportionate to create an exemption for these transactions.

The government acknowledges that a further shortening of the settlement period is possible in the future, particularly given technological developments in the financial services sector such as the growing use of distributed ledger technology (DLT) and the increased automation and efficiency of processes which is being driven by the move to T+1. Other jurisdictions have begun to introduce T+0 settlement for certain types of transactions, while CREST can already support T+0 settlement and a small proportion of securities trades already settle on T+0 in the UK today.

The government therefore considered whether it was necessary to use this SI to provide a mechanism for mandating T+0 settlement in the near future. However, it was considered that the government already has the ability to do so, either using the same power under which this SI is contemplated to be made or using the power under section 4(1) of FSMA 2023. It was also considered appropriate that such a change should need to be made through legislation (rather than, for example, in regulator rules) so that it is subject to Parliamentary scrutiny.

It is worth noting that the T+1 requirement introduced by this SI does not prevent settlement from taking place on T+0. T+1 is the latest date by which securities trades will need to be settled.

4. Next steps

Pending any technical comments received on the draft, the government intends to lay the final SI in advance of 11 October 2027, allowing ample time for appropriate legislative processes and Parliamentary scrutiny to take place beforehand and to provide early certainty for the sector.

This SI is subject to the affirmative procedure, meaning it needs to be debated and approved by both Houses of Parliament before it can be made. The timing for laying and debating the SI is subject to Parliamentary time.

When laying the final SI, the government will publish an accompanying explanatory memorandum and an impact assessment.

4.1 Feedback on this Statutory Instrument

The government will consider any technical feedback provided on the draft regulations by 27 February 2026. Feedback should be sent to the following email address: FMIPolicyBranch@hmtreasury.gov.uk.

Any feedback may be shared with the FCA or the Bank of England.

  1. Government response to Technical Group report ↩

  2. Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (Text with EEA relevance) ↩

  3. Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Text with EEA relevance) ↩

  4. Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (Text with EEA relevance) ↩

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