Supporting a Global Shortened Settlement Cycle
Firebrand Research, a specialist capital markets research and advisory firm, in collaboration with Clearstream, DTCC and Euroclear, has released a new research report, ‘Tackling Post-Trade Friction: Supporting a Global Shortened Settlement Cycle,’ which takes an in-depth look into industry preparations for 11 October 2027 when the UK, EU, Liechtenstein and Switzerland move to T+1 settlement.
The report, which is based on interviews with operations and technology teams representing 45 firms from the asset management, custodian, bank and brokerage communities, outlines some of the significant issues European markets will face as the shortened settlement cycle gets closer to the implementation date. It also highlights nine key success factors learned from firms’ North American T+1 implementations that should be considered for Europe, including budgets. Some of the key findings of the research comprise:
- The complexity of European T+1 means project teams will likely need to be larger than for North American T+1.
- The T+1 implementation budget for a small buy-side firm is likely to start at $223,000. In contrast, the budget for a large global custodian is likely to top $36 million.
- Firms will need to further automate their processes to be able to handle volume increases, particularly as recent market volatility has resulted in record volumes.
- An average of 83% of interviewee firms’ equity flow goes through automated central trade matching and an average of 71% of fixed income flow.
- 28% of respondent firms have yet to begin planning for the move to shorten the settlement cycle to T+1, which is planned for implementation in October 2027.
