The UK Financial Conduct Authority (FCA) recently voiced concerns about financial services firms’ readiness for the upcoming T+1 transition. The FCA worries many firms might not be ready for this major shift in transaction settlement, set for October 2027.
According to the FCA’s latest post, there’s a significant amount of complacency and challenges among firms impacted by this change. The T+1 transition, settling transactions a day after execution, marks a considerable departure from the existing T+2 structure. If firms aren’t adequately prepared, this change could disrupt the smooth operation of financial markets.
FCA Uncovers Complacency and Challenges
The FCA’s statement uncovers a disturbing level of complacency and challenges among affected firms. The regulator is closely monitoring the industry’s readiness for the forthcoming change. The FCA’s observations indicate a striking lack of urgency and proper preparation among some firms.
Although the T+1 transition is still a few years away, it’s crucial to remember that such a significant shift in settlement processes will demand a lot of time for firms to adjust their operations. They need to establish proper planning, testing, and implementation processes for a smooth transition.
Considering the potential impact of this change on financial market stability, it’s critical for all firms to prepare. The FCA’s warning highlights the importance of readiness for the transition. Firms should heed this warning and intensify their preparation efforts for the T+1 settlement.
The T+1 change aims to enhance efficiency and reduce risks in financial markets. However, if firms don’t start preparing now, the transition could cause significant disruptions and challenges. Therefore, it’s crucial for the industry to take the FCA’s warning seriously and begin earnest preparations for the upcoming transition.
