Capital Markets
With the publication on June 30 of its much-anticipated High-Level Roadmap, the EU T+1 Industry Committee made an unequivocal commitment to an October 11, 2027 transition date. While this is to be applauded, the Roadmap presents legally non-binding recommendations rather than mandatory obligations, which could be seen as offering scope for inaction. That would be a mistake.
Running to 60 pages, the Roadmap is a welcome development, not only articulating the core challenges ahead but also proposing a credible pathway to a successful transition. As we saw with the UK’s Accelerated Settlement Taskforce report, market alignment is most successful when firms engage early, prioritise automation and prepare thoroughly. In that spirit, we highlight below three areas from the Roadmap that warrant particular attention.
1. Real-time inventory and cash ladder management
The need for real-time visibility into inventory and funding is now well established, and the Roadmap reinforces its importance. Indeed, it is an imperative we have consistently highlighted with our own clients as a critical enabler for success under T+1.
The compressed timeline between trade execution and settlement requires firms to detect stock shortfalls, initiate borrows, and manage cash funding needs as early as possible in the trade lifecycle. This can only be achieved through enhanced inventory management tools and real-time cash laddering across global networks. Without this capability, the risk of settlement failure rises significantly.
2. The role of auto-borrow: convenience or cost?
The Roadmap includes a recommendation for implementing automated stock borrowing at ICSDs. While operationally helpful, auto-borrow can incur unexpected and sometimes unnecessary costs, particularly around corporate actions or where inventory has not been properly realigned.
Firms must strike a careful balance. Stock loan desks may have concerns about revenue displacement, and Operations Leads will recall historical pain points. Nonetheless, the message is clear: effective and timely access to stock is a core requirement for T+1. Whether through auto-borrow tools or refined recall strategies, the infrastructure must be in place.
3. Corporate actions and buyer protection: time to automate
One of the more forceful imperatives in the Roadmap is the need to address inefficiencies around buyer protection processing. In a world moving to T+1, the continued reliance on emails, PDFs, and simple goodwill to manage critical entitlements perpetuates unacceptable operational and financial risk.
This is an area ripe for innovation. An automated, industry-wide buyer protection solution would not only reduce risk but also create consistency across markets. Vendors and infrastructures have a clear opportunity here – this problem has been long acknowledged, and it is now time to act.
Other areas to consider
While the roadmap rightly focuses on readiness, a couple of adjacent challenges remain unresolved.
PSET matching. While certainly a positive step, increasing the use of PSET matching is sometimes seen as a solution for settlement issues. Problems will persist, however, particularly in the split between confirmation and settlement responsibilities across middle and back offices. Matching PSETs will not completely solve the issue if inventory is incorrectly located, and cross-timezone settlement adds complexity for DTC and ICSD settled instruments – a further reason to invest in real-time inventory management systems.
Manual instructions (and faxes!). The industry has yet to quantify the extent and impact of manual processing, not least where fax instructions are still in use. If these workflows are not understood and addressed, they risk becoming critical points of failure in a T+1 environment.
Read the signs, act accordingly
With the Roadmap, the Committee has provided a solid and sensible path for the EU’s T+1 transition. The expectation is that firms will act with urgency and intent. Those who start now – by assessing gaps, engaging vendors and securing investment – will be well placed not only to comply with the new standard, but to realise broader benefits around efficiency and resilience.
October 2027 may seem some way off, but the operational lead time needed for testing, rollout and cultural change means that (as with the UK’s own transition) there is time – but also no time to waste.
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