T+1 (Settlement cycle)
T+1 is a settlement cycle in which securities trades settle one business day after the trade date. Regulation (EU) 2025/2075 moves trades on EU trading venues from T+2 to T+1 from 11 October 2027; the United States, Canada and Mexico moved in May 2024, and the UK and Switzerland target the same date as the EU.
Roles that need it
What it is
The settlement cycle is the time between the trade date (T) and the intended settlement date. Under T+1, a trade executed on Tuesday settles on Wednesday. Article 5(2) of the Central Securities Depositories Regulation (CSDR) sets the maximum cycle for transferable securities traded on EU trading venues. Regulation (EU) 2025/2075 shortens it from two business days to one, applying from 11 October 2027.
The rule covers shares, bonds and other transferable securities executed on trading venues. Securities financing transactions are excluded, and parties can still agree a longer cycle for trades off venue.
Why it matters
A shorter cycle reduces the time counterparties are exposed to each other, so margin held at central counterparties for unsettled trades can fall. It also aligns the EU with the main markets in North America, which matters for global investors who trade in both.
The cost is a much shorter window for post-trade work. Allocations, confirmations, matching, foreign exchange for cross-currency trades, securities lending recalls and funding must all be done on trade date or early on T+1. Manual steps, late allocations and batch processes that run overnight become a direct source of fails, and CSDR cash penalties make fails costly. Corporate actions dates also shift, because the record date and the ex-date move closer together.
Worked example
Illustrative numbers. Under T+2, a fund manager has about 48 hours from execution at 15:00 on Monday to settlement on Wednesday. Allocations at 18:00 Monday, confirmations Tuesday morning and matching Tuesday afternoon all fit.
Under T+1, settlement is Tuesday. If the CSD night batch starts at 20:00 Monday, allocations and confirmations must be done in about 5 hours. Suppose 2% of a firm’s 10,000 daily trades today miss same-day allocation. Under T+1, those 200 trades risk missing the night cycle and need to settle in the daylight window on Tuesday, where any further delay turns them into fails.
Who uses it
Settlements Analysts redesign fail management for a shorter window. Corporate Actions Analysts update the rules for ex-date and record date. Middle Office and Investment Operations Analysts move allocation and confirmation to trade date. Custody Operations Analysts adapt cut-offs with sub-custodians and clients. Regulatory Change Analysts track the regulation, ESMA guidance and industry plans.
Common confusions
T+1 means one business day, so a Friday trade settles on Monday and holidays in either market push dates out. T+1 is also different from same-day settlement (T+0), which some markets discuss but which the EU has not adopted. Finally, the change applies to the maximum cycle on venues; it does not stop parties settling faster when they can.