With the T+1 go-live date across the UK, EU and Switzerland now 12 months away and the first regulatory milestone arriving in December, the focus is increasingly shifting from policy design to execution and operational readiness, including process automation, system upgrades, liquidity and funding arrangements and coordinated industry testing. Capco’s Rollo Burgess and Elisabeth Plakinger discuss what has changed since our last T+1 readiness conversation in March, new priorities and concerns, strategic versus tactical approaches and what should senior managers be asking of their T+1 programs.
When we spoke earlier this year, you highlighted a number of potential pressure points around the transition. Has anything materially changed and are firms where you’d expect them to be at this point?
Rollo Burgess: Broadly speaking, across the larger broker-dealers and custodians I work with, the short answer is yes, they are. A few things have changed, though. There are some technical elements that have come to light and increased in importance in the course of the year, for example, around the Gating Event (a new settlement convention, related to securities financing transactions), which is a big topic, potentially bigger than people were expecting.1
There have been some global changes outside of the EU, UK, Switzerland in terms of the T+1 trajectories. For example, Turkey and Hong Kong have caused some level of challenge through later announcement of plans and firms have needed to assess from a governance perspective how to address these emerging priorities around the world (e.g. ‘do I run one global program or not?’).
One of the bigger contextual challenges is the fact that many organizations are now thinking about how to deploy AI across their businesses. That was the case in the spring, and it’s even more prominent now. While AI can assist your journey towards T+1, it does mean that the change capacity is in shorter supply. It’s a fast moving and fast changing environment with many dependencies, and management bandwidth is under stress.
Elisabeth Plakinger: The challenge has shifted from defining requirements to demonstrating operational readiness. While the industry has established the testing windows for 2027, firms are still determining which scenarios, counterparties and market infrastructures they can realistically test.
The priority is risk-based testing of changed functionality, critical exceptions and cross-border flows, supported by production metrics that already reveal weaknesses in allocation, confirmation, matching and settlement processes. The remaining challenge is ensuring that clients, custodians and other market participants can meet the compressed timelines.
The question is no longer simply whether individual institutions are ready, but whether the entire settlement chain can operate within T+1 timelines. Large institutions may have mature programs, but their settlement performance still depends on clients, counterparties, custodians and market infrastructures.
Smaller asset managers and clients relying on manual allocations and confirmations are a particular concern. Firms need to identify these dependencies through actual transaction data and targeted client engagement rather than relying solely on program-level readiness assessments.
In March, the expectation was that manual processes, exceptions and legacy ways of working were all areas likely to come under pressure. What progress are you seeing there? Are the same issues still the biggest focus?
Elisabeth Plakinger: Manual exception handling remains a significant risk because T+1 leaves substantially less time to investigate and repair transactions. The challenge extends beyond standing settlement instructions (SSIs) to the accuracy and timeliness of settlement locations, instrument data, client information and trade allocations.
For example, a client may populate the place of settlement (PSET) during confirmation, but that information may not match the actual settlement location. The result is a downstream matching break that still requires manual intervention.
The priority should be eliminating recurring exceptions at source and automating time-critical processes. AI can support these improvements, but it is not a substitute for accurate data and reliable operating processes.
It's incumbent on larger firms and the industry as a whole to support smaller and regional market participants… that’s where a lot of focus will be in 2027.
External dependencies were another major theme. As firms have progressed their own programs, has readiness across clients, counterparties, custodians and vendors kept pace?
Rollo Burgess: I would say largely yes, but we won’t really know until we get further ahead. In general, across the large brokers and custodians those external dependencies should be under control and being managed effectively. It’s incumbent on those firms and the industry as a whole to support smaller market participants and regional market participants in making the T+1 transition. That's where a lot of the focus will be as we go through 2027.
Elisabeth Plakinger: External dependencies remain one of the largest uncertainties. Firms need more than confirmation that a custodian, CSD or technology provider has a T+1 program. They need clarity on when specifications will be finalized, which functionality will be available, which test environments are connected and which scenarios can be executed across the settlement chain.
A particular challenge is that individual infrastructures may offer testing without supporting a fully connected end-to-end market test. Firms therefore need to distinguish between dependencies that are being monitored and those for which readiness has actually been demonstrated.
With the December 2026 regulatory milestone approaching, where should firms be focusing their attention between now and then?2 And what would concern you if it was still unresolved at year-end?
Elisabeth Plakinger: The immediate priority is trade-date allocation and confirmation performance. Firms should already know which clients provide accurate and complete information on time, where manual intervention remains necessary and which counterparties consistently miss the required timelines.
By year-end, I would expect firms to demonstrate measurable improvements in these areas, supported by targeted client outreach and remediation. Simply increasing automation is not sufficient if the underlying data remains inaccurate or arrives too late.
Rollo Burgess: SSI handling is a key recommendation. The extent to which more market participants are integrating with the various electronic platforms and using them for the distribution and management of SSIs – other than emailing – will be a good barometer of how the whole ecosystem is modernizing. That will be an interesting test, and while we won't find out immediately at the beginning of December; it will become apparent as we go through 2027.
Managing external dependencies and ensuring market-wide readiness will be key to achieving T+1 readiness collectively.
As programs have moved from planning to implementation what new priorities have emerged that perhaps weren’t obvious six months ago?
Rollo Burgess: I'd call out the handling of the Gating Event as a more prominent change than people imagined earlier in the year and something the industry is trying to get right.
The other new priority we're encouraging our clients to focus on is thinking not just about achieving T+1 settlement for a high proportion of trades, but also achieving that while preserving or even improving the efficiency of their inventory management and funding processes.
There's achieving T+1 and then there's achieving it in the right way. If it is achieved at the cost of a significantly increased level of borrowing, stock borrowing and so forth in order to support your settlement processes, then that will eat into your already thin margins.
As more processes move to same-day, optimizing your inventory and funding requirements should be a key initiative. The benefit won't necessarily show up in your settlement performance number next October, but it will impact business performance if you don't get it right.
Are firms using T+1 as an opportunity to remove the root causes of exceptions and improve their operating models? Or are you seeing tactical fixes designed simply to get them over the line?
Rollo Burgess: In terms of the clients I'm working with, people are using this as an opportunity to improve their process strategically. They are making fundamental changes in their technology infrastructure and moving to a different and compressed workflow. I certainly don't think that firms are approaching this purely tactically.
Having said that, I do think there will inevitably be some tactical fixes and last-minute scrambling to get over the line. The challenge for everyone is to minimize this and ensure that, wherever it does occur, it remains a temporary phenomenon.
If you achieve T+1 at the cost of having a significantly increased level of borrowing, stock borrowing and so forth to support your settlement processes, then that will eat into your already thin margins.
What are some of the practical steps Capco is taking to support our clients through the transition? What are we hearing from clients now? Where are they most confident and where are they asking for the most help?
Elisabeth Plakinger: Clients increasingly need support translating T+1 requirements into measurable operational changes. This includes analyzing existing allocation, confirmation and settlement performance, identifying recurring exceptions, prioritizing automation and assessing dependencies across clients, custodians and market infrastructures.
Testing is another important area. We help clients define a proportionate, risk-based approach that focuses on changed functionality, market-specific requirements, critical exceptions and processing capacity rather than attempting to test every existing transaction flow.
Our experience across capital markets operations, technology delivery and the US T+1 transition allows us to connect regulatory requirements with the practical changes needed to achieve sustainable settlement performance.
Rollo Burgess: There are a few practical initiatives we’re running with clients right now, such as facilitating collaboration across the ecosystem – for example, getting groups of clients together and encouraging them to collaborate and think about how they can approach the transition, working with peers across the industry.
We're doing a great deal of work on leveraging AI and AI-driven process transformation and optimization (for example using AI tooling to manage aspects of operational client interaction), which is related to firms’ T+1 programs in many cases. Our Capital Markets Smart Suite offers modular AI solutions for trusted data, operational control and scalable value across the trade lifecycle.3 This is anchored in decades of capital markets domain expertise, technical delivery capability, governance, architecture, data and change execution.
Moving to T+1 settlement touches a lot of different processes and parts of the organization. One of the most complicated aspects of delivering that in a large firm is the sheer scale of internal dependency management. Typically, T+1 isn’t the only transformation program firms are running. There is a lot of complexity in terms of how to manage and sequence the volume of change that's going through the end of this year and through next year, and that will only intensify.
A genuinely T+1-ready firm should be able to demonstrate efficient collaboration across the market - with clients, external providers and counterparties.
What should senior leaders be asking of their T+1 programs for now? What evidence would convince you that an organization is genuinely on track rather than simply reporting that it is?
Rollo Burgess: They should be asking about three categories of things. Firstly, let's talk through database detail on your principal fail reasons, what's driving those fails and what you’re doing about them. They should be asking to see that data organized by client, market and other dimensions. You can tell a lot from how much insight organizations have and how focused their changes are on the root causes of fails.
Secondly, integration and engagement with inventory management and funding processes is something else I'd be asking about. Have you considered this and are you working on this in terms of how you're managing your inventory, funding, treasury implications, etc?
The final question I'd ask would be about clients. Have all our clients heard from us on this topic? Have we heard from them? What are they saying? What are their concerns? At this stage, firms should be very much in a two-way dialogue with key clients about T+1. We are seeing that as a big focus with our clients.
If we revisited in early 2027, what would you expect the genuinely T+1-ready firm to be able to demonstrate?
Elisabeth Plakinger: By early 2027, I would expect firms to demonstrate readiness through evidence rather than program status reports. That means measurable improvements in trade-date allocations, confirmations and matching, fewer recurring exceptions and a clear understanding of which clients and external dependencies still present risks.
They should also be able to show that critical scenarios have been tested, including gating, cross-border settlement and processing under compressed timelines. Where full end-to-end industry testing is not possible, the remaining risks need to be explicitly identified and managed.
Finally, readiness must be economically sustainable. Achieving T+1 by adding manual shifts, increasing stock borrowing or holding larger liquidity buffers may protect settlement performance in the short term, but it is not an efficient long-term operating model.
With the transition approaching, now is the time to move beyond planning and validate operational readiness across processes, technology, counterparties and exception management. Contact us to discuss how to assess your T+1 readiness, identify remaining gaps and prioritize the actions needed ahead of the December 2026 regulatory milestone and October 2027 go-live date.
References
1 The T+1 Gating Event is a new settlement mechanism that holds flagged instructions and automatically releases them at 11:00 CET on settlement day, helping synchronize settlement and preserve netting and liquidity efficiency (source: https://www.icmagroup.org/News/news-in-brief/icma-welcomes-publication-of-eu-t-1-industry-committee-guidance-on-the-gating-event)
2 7 December 2026 marks the first EU T+1 regulatory milestone, with new CSDR requirements for trade allocation and confirmation processes coming into effect ahead of the October 2027 transition (source: https://www.esma.europa.eu/sites/default/files/2026-01/EU_T1_Related_Legislative_and_Regulatory_Developments.html)
3 Capco Smart Suite is a modular, AI-driven platform designed to transform capital markets operations, enhance compliance, and optimize client servicing through intelligent automation and data-driven insights. https://www.capco.com/industries/capital-markets/capital-markets-smart-suite