EU T+1 – Taking the industry pulse on preparedness

How ready is the EU finance community for the transition to T+1 settlement in the EU in October 2027? This pulse survey provides the answers with fresh, statistical insights on where and how the journey towards T+1 in the EU is progressing drawing on insights from over 350 industry professionals from the main sectors of the market.

Supported by key FMIs and an extensive range of industry associations, and published by theValueExchange, this report covers the first EU T+1 pulse survey results, expected to be the first of a series of surveys during the transition to T+1 in October 2027.

• 65% are actively engaged in preparation, from mapping requirements to fully ready
• Only 3% of the EU survey respondents have yet to start their T+1 journey
• 32% are analysing the industry recommendations
• 7% are already compliant with requirements
• 3% are fully ready

T+1 implementation is expected to have an impact on short-term costs and on the cost of settlement risk. While long-term benefits are expected, the main concerns center on higher operational costs during the first year and increased risks and costs from potential trade fails.

Many of these short-term costs – such as upfront investments in automation – will deliver lasting benefits by improving efficiency. Likewise, short-term risks will diminish as T+1 quickly becomes business as usual.

Broken down in more detail, concerns over operational processes and their impact on FX, funding and securities lending costs in the short term are perceived as having potentially larger impact by the industry.

Settlement efficiency is at the heart of respondents concerns while migrating to T+1. With the introduction of new penalty rates by ESMA through CSDR refit, it will be a key element to follow up closely with the industry.

Euroclear has long recognised the challenges of improving settlement efficiency and in 2023 created a working group with members of the Euroclear Bank User Committee to focus on settlement efficiency and propose steps we can take as a community, collectively to improve settlement efficiency.

With T+1 migration, our objective is to maintain a high-level of settlement efficiency in a compressed timeframe, while maintaining a credit efficient approach. Our settlement optimisation tools such as partial release will be further enhanced to support this objective with other enhancements in the pipeline too. Read more about Boosting settlement efficiency - Euroclear

Our settlement efficiency analysis has shown that today, late matching fails represent around 25% of the fails and this might be exacerbated in a T+1 context.

While we have worked closely with participants who were facing matching issues, we have noticed considerable improvements. This is why we have set an ambitious industry goal. By the end of 2025, we aim to have 95% of instructions matched by the end of T+1, adding to the existing benchmarks.

As time will reduce in a T+1 environment, matching on time will remain of essence. Therefore, we are investing to help you. While we are aiming at extending our matching window to reduce our matching downtime to a minimum, we are also introducing a new product, EasyFocus®+ to help you improve and automate matching issue resolution.

EasyFocus+ is our innovative and ground-breaking settlement efficiency platform, taking Euroclear’s universe of settlement data, analysing and enriching it using AI to re-write the settlement story. Learning from our existing EasyFocus product, shaped by client feedback and our settlement efficiency initiative, EasyFocus+ is a new cloud-based platform more accessible, packed with new features. Much more than a trade matching tool, EasyFocus+ converts settlement and matching data into insights and insights into action. By using trend analysis of settlement instructions causing recurring issues, you can fix them permanently, improve the quality of your SSIs and solve issues before they arise. The end result will be fewer failed transactions, greater settlement efficiency and lower CSDR penalties overall. Read more about EasyFocus+ Euroclear

It is widely recognised that T+1 means automation. Many existing industry manual processes will be unable to cope with compresses timescales and greater volume under the T+1 settlement regime. More than 50% of firms expect to increase their automation of:

• SSIs messages
• Populating Place of Settlement (PSET) at point of allocation / confirmation
• corporate action processing such as market claims
• inventory management processes (e.g stock and cash forecasting and processing)
• partial settlement / partial release implementation

The good news is that investments into automation are growing, with over a third of respondents’ T+1 project activity now focused on platforms investments across the entire trade cycle.

We will continue working closely with clients to enhance settlement efficiency and prepare for T+1. Our approach includes identifying critical focus areas within their processes, benchmarking their practices against the highest-performing peers in our settlement system and collaborating to implement improvements that reduce inefficiencies and strengthen overall performance. While 66% of survey respondents identified dependencies on (I)CSD developments / readiness as a concern and 62% their dependencies on custodian development / readiness, Euroclear has committed its resources to ensure all our systems and processes are not only T+1 ready, but enhancements and new products and services will be delivered during the road to transition to support our clients own transitions.

As a global FMI, Euroclear has decades of experience of managing the complexity of diverse European markets and integrating them into a single seamless experience for our clients, leaving them free to focus on managing their own performance.