Journey to T+1
Supporting Clients on their Journey to T+1 Settlement Cycle
The shortening of the settlement cycle to T+1 is a further crucial step towards achieving integrated European post-trade markets. Clearstream is committed to being a trusted partner throughout your journey. Our systems are settlement cycle agnostic already today, and we bring deep expertise and software solutions to help market participants navigate this transformation with confidence.
T+1 – The Regulatory Aspect
The provisional agreement between the European Council and the European Parliament published on June 18 marks the latest development in the regulatory space to pave the way for the shortening of the settlement cycle from T+2 to T+1. The change is set to take effect on October 11, 2027, marking the first trading day under the new system.
A major motivation for this shift is to align with global markets that have already transitioned to T+1, thereby minimizing operational risks, promoting market harmonization, and further lowering investment barriers in Europe. What is clear from this: the move to T+1 will significantly compress the time available to complete all post-trade activities required for timely settlement. Increasing operational efficiency and automation will be key across the industry.
This provisional agreement foresees to exempt securities financing transactions (SFTs), puts further focus on ESMA reporting on settlement efficiency, and paves the way for the European Commission to consider a temporary suspension of cash penalties if necessary and at a later stage. Next steps involve finalizing the text through informal technical meetings, a 48-hour silence procedure by the Polish Presidency, and subsequent approval processes in the European Parliament's ECON Committee and Plenary.
To steer effectively through this transition, it is essential to draw lessons from early adopters such as the United States and India, engage with market participants across the continent to assess readiness, and develop a clear, supportive roadmap. Clearstream and Deutsche Börse Group have been at the forefront of these discussions from the very beginning and remain committed to supporting our clients and the global market on this journey. We are actively participating in industry committees and working closely with our clients and stakeholders to ensure a successful and coordinated shift to T+1.
T+1 – The Talking Points
The latest research paper from Firebrand to which Clearstream has contributed, offers a timely snapshot of the key themes and challenges surrounding Europe’s transition to a T+1 settlement cycle. Based on interviews with industry participants, the findings highlight both strategic considerations and operational realities that must be addressed in the lead-up to the October 2027 implementation date.
Key Success Factors from North America
- As seen in the lessons from North America’s move to T+1, there are key success factors given below that should be considered for Europe.
- These include early preparation and testing, which emerged as critical enablers of a smooth transition.
Settlement Efficiency: Present and Future Priority
Settlement efficiency is already a central concern in today’s environment—and it will become even more important under a compressed T+1 cycle. The research identifies several pain points that must be addressed:
- An average of €70.43 million per month was paid in fails penalties in 2024 for settlement failures on the TARGET2-Securities (T2S) platform. This highlights that settlement fails remain a significant issue and could become even more impactful under T+1.
- 71% of settlement failures in 2024 were caused by counterparty short positions, while 21% were due to data issues, including incorrect or stale standing settlement instructions (SSIs)—a recurring issue for years.
- On average, 83% of equity flow and 71% of fixed-income flow among interviewee firms is processed through automated central matching. However, the research makes clear that more automation is needed to support the demands of T+1.
Cost of Implementation
- The European T+1 implementation budget varies significantly by firm size.
- For a small buy-side firm, the budget is likely to start at $223,000, while for the largest global custodians, it could reach up to $36 million, covering both people and technology costs.
Planning Status Across the Industry
- Despite the urgency, 28% of respondent firms have yet to begin planning for T+1.
- While it’s not too late to start, the October 2027 deadline is just over two years away, and early action will be essential.
“Europe’s move to a T+1 settlement cycle marks a pivotal step toward global market harmonization, aligning with the U.S., Canada, India, China, and others to enhance efficiency, reduce risk, and strengthen its role in an increasingly interconnected financial world. At Clearstream, we are committed to supporting our clients throughout this transition, helping them adapt and thrive in a more efficient and resilient global financial ecosystem,” says Kathy Waldie, Head of TARGET Services Governance at Clearstream and Co-Chair of the T+1 Settlement Workstream within the EU Industry Committee.
Lessons learned from North America
The transition of North American markets to T+1 settlement in May 2024 was largely smooth, akin to the Y2K preparation, with extensive industry readiness and minimal issues. Key lessons learned include the importance of strong leadership and governance, early and extensive industry testing, and a focus on areas beyond equities settlement such as FX and fund cycles. Education for clients and internal teams was crucial, as was the need for greater post-trade automation to reduce operational risks. Confirming trades on the trade date has proven essential for resolving matching problems and exceptions quickly, significantly increasing affirmation rates. Regulatory clarity and support were considered vital. Overall, the move underscored the necessity of modernizing legacy systems to enhance market resilience and efficiency. What remains open and a priority are required FX process changes, a theme we will face in Europe as well in the move to T+1 (Firebrand Research, 2025).
Each of these lessons needs to be carefully considered by the industry as Europe advances toward T+1, with Clearstream experts actively contributing to working groups and offering practical, forward-looking recommendations designed to ensure long-term effectiveness and feasibility for all market participants.
T+1 – The Timetable
The next big milestone on the journey to T+1 was the publication of industry committee recommendations and the official implementation playbook. Those documents will guide all market participants on how best to prepare for the transition to T+1.
On June 30, 2025, the High-Level Roadmap to T+1 Securities Settlement in the EU was published, consolidating recommendations from various technical workstreams—including trading, settlement, corporate actions, and more.
Clearstream has actively contributed to all the workstreams which have developed recommendations. Involving all relevant industry aspects was seen important to ensure that recommendations are addressing the right issues to make the T+1 migration a success.
The publication of the recommendations marks the starting line of a metaphorical race for all market participants to prepare for what is now an inevitable shift. Over the coming months, we will delve into each of these recommendations in detail, offering guidance on how to interpret and implement them effectively. In this context we will provide you with timely insights into each key milestone, practical preparation strategies, and the range of services Deutsche Börse Group and Clearstream can offer to ease the transition.
Key milestones
As a preview of what’s to come, here are some of the major topics featured prominently in the report, each with significant implications for the broader market:
Operating Timetable
This table provides a concise overview of the key recommended timings, categorized under 11 defined “Gating Events[1].”
Day | Topic | Deadline / Time | Details |
T+0 | Stock Loan Recalls | 17:00 CET (Trade Date) | Initiate recall as soon as sales are known. |
T+0 | CCP EOD Processing | 22:00 CET (Trade Date) | Include trades in EOD netting. |
T+0 | CCP Reports & Instructions | 22:30 CET (Trade Date) | Release netting reports and submit instructions. |
T+0 | Allocations & Confirmations | 23:00 CET (Trade Date) | Complete between buy-side and brokers. |
T+0 | Settlement Instructions | 23:59 CET (Trade Date) | Submit to CSD for night batch inclusion. |
T+1 | Start of Settlement | 00:00 CET (Settlement Date) | T2S C1S4 [2]at 00:00, C2S4 at 02:00. |
T+1 | FX Transactions | 00:00 CET (Settlement Date) | Submit to CLS for PvP settlement. |
T+1 | SL Recall Notification | 15:00 CET (Settlement Date) | Notify returns for settlement. |
T+1 | SL Recall Settlement | 15:30 CET (Settlement Date) | Complete settlement to allow reuse. |
T+1 | DvP Cut-off | 16:00 CET (Settlement Date) | Harmonized earliest cut-off. |
T+1 | FoP Cut-off | 18:00 CET (Settlement Date) | Harmonized earliest cut-off. |
[1] Gating Events: Key post-trade processes—such as allocation, confirmation, and instruction generation—that must be completed before settlement. Under T+1, their timely execution is critical to ensure smooth and efficient settlement.[2] C1S4 - The first T2S Night-time settlement cycle Sequence 4. During C1S4 all types of settlement instructions, settlement restrictions and liquidity transfers are considered for settlement. C1S4 precedes C2S4.
Recommendations:
- Golden Standard of Messaging: A new "gold standard" format for settlement instructions (SSIs) and standardized messaging for allocations and confirmations are being developed. Particular emphasis will be placed on critical elements such as Place of Settlement (PSET) and Place of Safekeeping (PSAF), which are essential for accurate and timely settlement.
- Liquidity Management Tools: Leveraging functionalities like partial settlement, hold and release, shaping and other features offered by CSDs and counterparties will be vital for managing intraday liquidity under tighter settlement timelines.
- Early Trade Matching & Confirmation: To support the shift to T+1, market participants will be expected to complete all pre-settlement activities—such as trade execution, allocation, and confirmation—on the trade date itself. Timely, intraday exchange of these messages facilitates early trade matching at CCPs or CSDs, enabling inclusion in night-time settlement batches within platforms like T2S. This forward-looking approach helps alleviate operational congestion on the settlement day and significantly reduces the risk of settlement failures. Just as a high-level indicator: in today’s T+2 environment only 65 %of transactions are matched at the time of the Night-Time Settlement (NTS).
- Automation of Manual Bottlenecks: Firms will need to assess and automate manual processes that hinder straight-through processing (STP) or real-time liquidity management. Investment in automation will be key to ensuring operational resilience. “T+1 means automation, automation, automation and this will require substantial investment.” - Giovanni Sabatini, Chair of the EU T+1 Industry Committee.
- FX Workflows Need Review: The way FX transactions are handled, particularly those linked to securities settlement, need to be reviewed. This will impact the operating models of industry entities but should ensure they can efficiently manage FX risk and liquidity under T+1.
These recommendations will impact a wide range of stakeholders—including asset managers, brokers, dealers, and market makers—and requires a concerted effort to streamlining trading and pre-settlement processes. They will also complement post-trade enhancements, collectively supporting a smoother transition to T+1.
Ultimately, this transformation will not only pave the way for a successful T+1 implementation and greater market alignment, but also reinforce Europe’s position as a leading global investment hub while advancing the objectives of the Savings and Investment Union (SIU) / Capital Markets Union (CMU).
T+1 – The Clearstream View
As Europe prepares for the shift to a T+1 settlement cycle, Clearstream is committed to being a trusted partner throughout the journey. Our systems are settlement cycle agnostic already today, and we bring deep expertise and software solutions to help market participants navigate this transformation with confidence
1. Expert Guidance and Readiness
Clearstream is fully equipped to support all your T+1-related needs. With systems already capable of operating under a T+1 regime and even T+0, we offer both technical readiness and strategic insight to help you adapt efficiently.
2. Industry Engagement and Representation
We encourage your active participation in the industry committees and working groups. Your feedback and concerns are important, and Clearstream is committed to representing your voice in key discussions shaping the future of settlement in Europe.
3. Comprehensive Services and Infrastructure
Clearstream offers a suite of securities services to support your transition, including:
- Robust Pan-European CSD Solution: Enabling seamless cross-border investment and settlement.
- Fails Coverage: Reducing your settlement fails with automatic lending of securities via our ASL and ASL Principal solutions.
- Settlement Efficiency Tools: Make use of our settlement dashboards to get insights into the settlement performance of your company.
- Pioneers in Partial Settlement/Partial Release: Leading the way in partial settlement and partial release initiatives.
- Unique Collateral Management: Functionality to identify, cover fails, and source collateral from both ICSD and T2S locations.
- Diverse Lending Pool: Offering a wide range of instruments, including ETFs, Fixed Income, and Equities.
- Flexible FX Transactions: Synchronize your settlement and FX transactions with T+1 or T+2 value dates via SWIFT or Xact portal.
- Automated FX Conversions: Automate FX conversions for custody proceeds, interest, and dividends with T+2 value dates, expanding to T+0 by Q4 2025.
- T2S Messaging Shield: Protecting clients from messaging updates towards T2S.
T+1 – Your Journey
The T+1 developments are taking shape now with regulatory clarity on the timeline and the industry committee recommendations. Clearstream experts are contributing to the design and implementation of a T+1 framework that serves the best interests of all market participants. You can meet our experts in several industry events or by reaching out to our representatives for guidance and support.
Watch out for our next News series on T+1 where we will provide a more detailed view on the industry committee recommendations.
With Clearstream, T+1 isn't just a goal, it's a journey we make better together.
Contact us
For any questions, please contact us on: t+1@clearstream.com.