Lessons from T+1 settlement: Risk mitigation and future implications

The transition to a T+1 settlement cycle marks a significant milestone in the evolution of global securities markets. This paper examines the key operational, technological and strategic challenges encountered during implementing T+1 and the lessons learned by early adopters, particularly in the US and Canada. The accelerated settlement cycle, designed to reduce counterparty risk and enhance market efficiency, demands a fundamental rethinking of post-trade workflows, requiring companies to adopt automation, streamline processes and foster cross-industry collaboration. The paper also highlights the implications of compressed timelines for cross-border transactions and the critical role of regulatory frameworks in ensuring a smooth transition. In addition, the analysis explores the readiness of other jurisdictions, including the UK and Europe, which are planning transitions to T+1 by late 2027. Drawing on real-world examples and industry insights, this paper provides actionable guidance for companies navigating T+1 while considering the broader implications for future settlement cycles such as T+0. Additionally, the paper assesses how the takeaways from T+1 can shape the transition to T+0, particularly in automation, liquidity management and risk mitigation. This article is also included in The Business & Management Collection which can be accessed at https://hstalks. com/business/.