North America may have made the headlines when it shifted to T+1 securities settlement in May 2024, but the real challenge, it seems, is still to come. Europe — including the UK, Switzerland and Liechtenstein — has now formally committed to a T+1 transition by 11 October 2027.
But, as Natalie Berkecz, global head of regulatory product at Northern Trust, explains, the comparison between the two regions is more cautionary than comforting.
“North America’s migration was difficult, but it was still contained within a single regulatory environment and currency,” she explains. “In Europe, we’re looking at over 30 central securities depositories, 18 central counterparty clearing houses, 90 trading venues and a multitude of legal, operational and currency-specific frameworks. This is a fundamentally different level of complexity.”
Bigger and broader
The benefits of a T+1 settlement cycle — risk and cost reduction, improved liquidity, and greater alignment with global standards — are well understood.
“It’s about modernising the market infrastructure, making capital markets more efficient and competitive,” Berkecz says.
The challenge is not the ‘why’, but the ‘how’.
Where North America could lean on an existing governance framework and work towards a common implementation goal, Europe has to navigate a maze of jurisdictions, each with their own rules, infrastructure readiness and market practices.
“Not every European CSD has the same operating hours, or even the same capabilities,” Berkecz points out.
“Some allow partial settlements, others don’t. Some are connected to T2S, others are outside of it. That fragmentation makes harmonisation a real operational feat.”
And then there is the issue of currencies. Unlike in the US, where the dollar rules all, Europe must contend with settlement in euros, sterling, Swiss francs and others — each with their own central banking and liquidity considerations.
Lessons from across the pond
Despite the scale of the European challenge, there are valuable lessons to be taken from the North American experience. Chief among them is the need for early engagement and collaboration.
“Public-private cooperation is essential,” Berkecz stresses. “The industry working hand in hand with regulators helped drive consistency in the US. We will need even more of that in Europe, given the complexity involved.”
Other lessons include the importance of real-time trade matching, straight-through processing, and a well-defined regulatory timeline. Berkecz highlights that the late publication of cut-off times in North America caused avoidable disruption — a mistake that cannot be repeated.
“It’s one of the things we’re really focused on at Northern Trust,” she says. “The industry needs clarity well ahead of time to make the necessary system and process changes.”
A question of timing
That clarity will be vital when it comes to tackling Europe’s biggest operational challenges. With less time between trade and settlement, there will be less room for error. The cost of failure — particularly under Europe’s CSDR rules — could be significant.
“In 2024 alone, €70 million a month in penalties were paid for failed settlements across the T2S platform,” Berkecz notes.
“Those numbers will only rise if firms aren’t ready.”
Liquidity and funding are also key concerns. A shorter cycle reduces time to mobilise cash, increasing the risk of intraday shortfalls. Firms will need to re-examine their funding models, cross-border processes, and FX requirements.
This is especially true for asset managers. “There’s a risk of mismatches between fund settlement cycles and the underlying securities,” Berkecz says.
“If a UCITS fund has to deliver on T+1 but is investing in T+2 assets, that creates a settlement risk. We’re already seeing recommendations to bring fund timelines in line before 2027.”
Not starting from scratch — but not a repeat either
The hope, Berkecz suggests, is that firms can reuse some of the systems and processes developed for the North American transition.
But copy-pasting is not going to cut it.
“We’re not starting from zero, but it’s not a like-for-like implementation either,” she says.
“The operating models, stakeholder networks and infrastructure in Europe are entirely different.”
That is why Northern Trust is encouraging clients to begin now: assessing systems, speaking to counterparties, identifying gaps across the trade lifecycle and evaluating liquidity impacts.
“There’s a lot to do — and the firms that start early are the ones that will avoid the scramble later.”
To support that, the EU T+1 Industry Committee released a 60-page roadmap in June 2025, with 59 recommendations across areas such as funding, matching, cut-offs and governance.
Many of these require action by Q3 2025 — a deadline that is now fast approaching.
Getting ready
For Northern Trust, the focus is on helping clients prepare with as little disruption as possible.
The firm is drawing on its North American T+1 experience to advise on best practices and technology enhancements, while lobbying for early communication of regulatory changes — especially cut-off times.
“Change of this scale needs a clear plan, executive sponsorship and dedicated resourcing,” Berkecz says.
“Expect team sizes and funding to be bigger than last time. And expect planning to start sooner.”
With 2027 now firmly on the horizon, the message is clear: the work starts now.
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