The UK government has announced the country will move to a T+1 cycle for securities settlement from October 11, 2027. The move is part of the government’s Plan for Change to modernize the UK financial markets, improve capital markets competitiveness and deliver growth.

The announcement came after a meeting between Chancellor Rachel Reeves and some of the country’s top investment bankers and asset managers at No 11 Downing Street on Wednesday.

The change “brings the UK in line with best-in-class international markets such as the US, strengthens capital markets competitiveness, and cut costs for investors,” according to a government press release.

At present, a typical securities trade in the UK, such as the buying or selling of shares, takes two days to go through. A T+1 cycle will bring that period to one day, meaning that a trade will be completed a day after it is agreed.

The government believes that a “faster settlement will support economic growth by putting the UK at the forefront of modernised, highly efficient and automated capital markets.”

The move has been backed by wider business as well as the FCA and the Bank of England, the government has said.

Chancellor Rachel Reeves has said: “I am determined to go further and faster to drive growth and put more money into people’s pockets through our Plan for Change. Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.”

Logic behind move

The move is intended to reduce the time needed to complete a trade settlement, for example on the London Stock Exchange, and to put the UK in line with other international standard markets such as the US.

According to experts, “the move to T+1 reflects improvements in technology.” They argue that, “with most trading and banking activity occurring online, extra days to physically deliver securities or funds are no longer needed.”

The SEC in the US took a similar step in February 2023, moving away from the two-day completion cycle, or T+2, to a shorter one-day cycle. Until 2017 that period was three days, and was accordingly referred to as a T+3 cycle.

“Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.”

UK Chancellor Rachel Reeves

In December 2022, the UK government established the Accelerated Settlement Taskforce to explore the potential for faster settlement of securities trades in the country.

In March 2024, the Taskforce published its report, “which recommended that the UK should move to a T+1 settlement cycle no later than the end of 2027.”

A final report was published earlier this month, which outlined a full implementation plan for the first day of the UK’s transaction to a T+1 settlement cycle.

In a brief statement, the FCA said: “We support the transition to T+1 settlement in UK markets and call on industry to engage and start planning as soon as possible.”

Chief executive Nikhil Rathi said: “We highlighted how the move to T+1 will make our markets more efficient and support growth in our recent letter to the Prime Minister. We will support industry as they move to T+1, and expect firms to engage and plan early.”