European Bodies Issue T+1 Testing Plan

Following the creation of a Testing and Readiness Workstream at the end of 2025, the UK Accelerated Settlement Taskforce and the EU T+1 Industry Committee, along with the Swiss T+1 Task Force, have released a set of “guiding principles” to assist the industry with the transition, due in October 2027.

Introducing the report, the three bodies say that given the high degree of cross market participation between the EU, UK and Swittzerland, a significant proportion of participants expressed the need to implement unified T+1 programmes rather than establishing separate plans for each jurisdiction. “That, combined with the similarity of our post-trade/pre-settlement processes, meant that a single programme covering the three ecosystems would be of significant benefit, which reflects the jointly agreed pan-European migration,” they state.

The Testing and Readiness Workstream considered the recommendations set out in the respective T+1 final reports and created a coordinated plan for all European market participants and critical third parties, including Financial Market Infrastructures. Noting that “it is a well-established metric that post implementation, participants will have approximately 20% of the currently available processing time to complete the same range and volume of tasks as they do under T+2”, the bodies note that to ensure a smooth and successful transition, firms must automate, streamline processes and make use of all available settlement efficiency tools.

This plan outlines the general scope and principles of industry-wide testing and the business readiness activities each stakeholder should consider in preparing for the T+1 transition, irrespective of their geographic location. As has largely been the case with this transition, compared to the North American switch, FX is very much a side issue. The report merely notes that it is “an important function that is related, but ancillary, to the settlement of securities transactions”.  

“The EU UK T+1 Testing Taskforce and the Swiss SPTC T+1 Taskforce understand that the Continuous Linked Settlement (CLS) operational timeline [which is included in the report as an appendix] is not expected to change with the implementation of T+1 in the EU, UK and CH,” the report states. “Firms should therefore ensure that they are aware of any cut offs set out by relevant FMIs, including custodians and that they are able to integrate their FX operations, and all functions associated with the trading and settlement of FX into a T+1 securities settlement environment, noting the global goal of reducing FX settlement risk.”

The report also warns that readiness extends beyond testing alone. “The success of your transition depends on each participant having timely and well‑controlled processes from trade execution through to settlement,” it states. “This plan will help you test your compliance both individually and as part of the settlement chain.”

Unsurprisingly, the three key messages in the document are automation; a quick start to testing; and where a firm’s settlement chain is, in relation to the overall work. Acknowledging the complexity of the European market infrastructure, the authors observe, “In the publication of this report, we have sought to create a plan that is applicable across all jurisdictions within the European Economic Area, UK and Switzerland, to enable homogeneity in testing where possible.”

The full report can be accessed here.