From 11 October 2027, securities transactions in the European Union are expected to settle within one business day rather than the current two-day settlement cycle. While this may appear to be a technical adjustment at first glance, the transition will have far-reaching implications for operational processes, data flows and day-to-day collaboration between asset managers, management companies, custodians and other market participants. As a result, the question for many organisations is no longer whether they need to prepare for T+1, but how they can adapt their processes in time to meet the new requirements.

What exactly does T+1 mean?

While market participants today typically have two business days to reconcile trade data, exchange settlement instructions, process bookings and resolve outstanding discrepancies, this window will soon be reduced to a single business day. In doing so, European markets are following a trend that has already been implemented successfully elsewhere. The United States, Canada and Mexico have already completed their transition to T+1 settlement, and Europe is now preparing for the same transformation.

The challenge of T+1 does not lie in the shorter settlement cycle itself, but in the operational demands that come with it. Many processes that are still performed manually today will need to be completed significantly faster in the future. Reconciliations, data deliveries, settlement instructions and operational controls must all be finalised within a much tighter timeframe. Even minor delays may result in transactions failing to settle on time.

Organisations operating complex system landscapes, relying on external interfaces or using manual reconciliation processes are likely to be particularly affected. A high degree of Excel-based workflows and cross-border trading activities spanning multiple time zones can further increase the complexity. The more manual intervention required within a process, the more difficult it becomes to consistently meet the shortened settlement deadlines.

Process automation is becoming a key success factor

XENTIS clients already benefit from highly automated front-to-back processes and are therefore well positioned for the upcoming transition. Our software supports the seamless processing of orders and transactions while enabling automated data exchange with relevant third-party systems. Thanks to the close integration of individual functional areas, data can be processed efficiently and workflow steps can be automated throughout the investment process. These capabilities become even more valuable in a T+1 environment.

In addition, we continuously enhance our order and execution workflows to support shorter settlement cycles as effectively as possible. For example, we have expanded our FIX importer to enable faster processing of executions. At the same time, downstream processing mechanisms ensure that partial executions remain fully transparent and traceable at all times.