TradeTech 2025: Automation is key in push to T+1
16 May 2025 France
Image: stock.adobe.com/james
As expected, automation continued to be a dominant talking point at TradeTech in its 25th year.
However, the tone of conversation was much more serious and experts warned that failure to implement key automation processes could result in businesses being lost.
In the panel assessing the UK and EU’s approach to T+1 settlement, key talking points focused on how settlement misalignment between regions is impacting trading dynamics, and what the latest UK and EU timelines for migrating to T+1 are.
Kicking off the conversation, one panellist was already urging firms to consider how they would respond to T+0 (same day settlement), let alone T+1.
“T+0 is around the corner and you won't be able to do that without automation,” they argued. “Why would you want to do one migration to T+1 and then do another one for in just a few years? Why not do a single migration now, so that you are effectively T+0 enabled?”
Another speaker echoed the sentiments. “Automation is key,” they began. “And that's where maybe the regulator also comes in to incentivise.
“We have to maybe mandate some sort of automation.”
One of the key discussion points centred around the lessons that could be learnt from the US transition — a successful move, but one made possible through increasing the number of bodies working in the process.
On the transition, a member of the industry said: “I think it went a lot more smoothly than we thought.
“We had a lot of the infrastructure there already. One of the things about T+1 is that it has put pressure to use risk to manage settlement date mismatches — which maybe isn't a bad thing — but it has added cost.”
They pointed out that these costs lie in having to move or extend settlement dates.
At the heart of ensuring readiness for T+1 is in the preparation and financial investment in middle and back offices — something that has definitely increased.
One panellist added: “I think over the last couple of years, with the CSDR, especially in Europe, a lot of companies have invested into their middle office and back office. That awareness has definitely increased.
“Nowadays it's pretty important and it is agreed that it increases the cost of trade if you don't [invest].”
The UK, EU and Switzerland have confirmed a shift to a T+1 settlement cycle on 11 October 2027.
One industry member was pleased with this alignment, stating: “I think the regulators did a good job with the EU, UK and Switzerland aligned by the date. I'm confident that the industry will manage, [but] talk to your custodians, talk to your brokers, talk to the regulators. Get ready.”
But what advice should the industry take to get ready?
A speaker argued that the existing published guidance for the UK will help firms get ready for the shift, but added that this was not mandatory and it was up to the individual firms whether they wanted to follow the guidance.
They said: “At the end of the day, firms need to decide if they want to be an effective market participant or not. If you do, you will need to automate. So better to do that sooner rather than later.”
As for Europe, a panellist explained that, “there is still time to get involved in the work.
“We are working together with the industry committees to define what are going to be the regulations and what will be industry market practice. It's very important that everyone gets involved, not just post-trade. It's really the whole [market] that is concerned so it is very important to get involved.”
The discussion finished with a final warning to firms who prepared for the US shift to not become complacent. “You may well be in the category of lucky individuals who have built a system for complying with T+1 in the US which will work in Europe and the UK, but please don't assume that is the case,” a speaker insisted.
They added: “Don’t assume compliance and then don't do the work to reconcile what you need with what you have built. I just want to issue that word of caution.”
However, the tone of conversation was much more serious and experts warned that failure to implement key automation processes could result in businesses being lost.
In the panel assessing the UK and EU’s approach to T+1 settlement, key talking points focused on how settlement misalignment between regions is impacting trading dynamics, and what the latest UK and EU timelines for migrating to T+1 are.
Kicking off the conversation, one panellist was already urging firms to consider how they would respond to T+0 (same day settlement), let alone T+1.
“T+0 is around the corner and you won't be able to do that without automation,” they argued. “Why would you want to do one migration to T+1 and then do another one for in just a few years? Why not do a single migration now, so that you are effectively T+0 enabled?”
Another speaker echoed the sentiments. “Automation is key,” they began. “And that's where maybe the regulator also comes in to incentivise.
“We have to maybe mandate some sort of automation.”
One of the key discussion points centred around the lessons that could be learnt from the US transition — a successful move, but one made possible through increasing the number of bodies working in the process.
On the transition, a member of the industry said: “I think it went a lot more smoothly than we thought.
“We had a lot of the infrastructure there already. One of the things about T+1 is that it has put pressure to use risk to manage settlement date mismatches — which maybe isn't a bad thing — but it has added cost.”
They pointed out that these costs lie in having to move or extend settlement dates.
At the heart of ensuring readiness for T+1 is in the preparation and financial investment in middle and back offices — something that has definitely increased.
One panellist added: “I think over the last couple of years, with the CSDR, especially in Europe, a lot of companies have invested into their middle office and back office. That awareness has definitely increased.
“Nowadays it's pretty important and it is agreed that it increases the cost of trade if you don't [invest].”
The UK, EU and Switzerland have confirmed a shift to a T+1 settlement cycle on 11 October 2027.
One industry member was pleased with this alignment, stating: “I think the regulators did a good job with the EU, UK and Switzerland aligned by the date. I'm confident that the industry will manage, [but] talk to your custodians, talk to your brokers, talk to the regulators. Get ready.”
But what advice should the industry take to get ready?
A speaker argued that the existing published guidance for the UK will help firms get ready for the shift, but added that this was not mandatory and it was up to the individual firms whether they wanted to follow the guidance.
They said: “At the end of the day, firms need to decide if they want to be an effective market participant or not. If you do, you will need to automate. So better to do that sooner rather than later.”
As for Europe, a panellist explained that, “there is still time to get involved in the work.
“We are working together with the industry committees to define what are going to be the regulations and what will be industry market practice. It's very important that everyone gets involved, not just post-trade. It's really the whole [market] that is concerned so it is very important to get involved.”
The discussion finished with a final warning to firms who prepared for the US shift to not become complacent. “You may well be in the category of lucky individuals who have built a system for complying with T+1 in the US which will work in Europe and the UK, but please don't assume that is the case,” a speaker insisted.
They added: “Don’t assume compliance and then don't do the work to reconcile what you need with what you have built. I just want to issue that word of caution.”
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