The TRADE predictions series 2025: Post-trade and the shift to T+1
There will be greater focus in 2025 on European competitiveness, with regulators needing to strike the right balance between fostering growth, competition and innovation in clearing on one hand and maintaining regulatory oversight and financial stability on the other. Central clearing will play a key role in this debate, which will be essential for advancing the region’s capital markets, and we look forward to Emir 3.0 helping in this regard.
Kaisha Schnoll, assistant vice president, STP Investment Services 2025 Trade predictions:
In 2025, discussions around the UK and EU’s transition to a T+1 settlement cycle are expected to intensify. The UK has outlined a roadmap targeting Q4 2027, but despite ample time to prepare, significant actions are likely to commence soon. Whether the UK moves in sync with the EU or independently, substantial preparation will be necessary to ensure a smooth transition.
The UK Accelerated Settlement Taskforce (AST) is reviewing current infrastructure to guide regulators and policymakers in this shift. Its forthcoming report will outline the roadmap, including a target completion date, necessary steps, and operational requirements.
Accelerated settlement offers benefits like reduced counterparty risk, enhanced liquidity, and alignment with the US. However, risks remain, including compliance challenges under the Central Securities Depositories Regulation (CSDR), tax complexities, cross-border trading, and CSDR penalties, all of which heighten concerns among market participants.
To adapt, market participants will need to streamline processes using technologies like blockchain and real-time data analytics. Institutional investors and brokers may adjust more easily, but smaller firms could face difficulties, necessitating investment in new infrastructure or reliance on third-party service providers. Despite these challenges, T+1 aims to enhance resilience and strengthen the UK and EU’s global financial standing.
Read Kaisha’s and other industry experts’ predictions here.
