The World Federation of Exchanges (WFE) has published industry-wide guidance on the operational, regulatory and strategic considerations involved in shortening securities settlement cycles, providing a roadmap for jurisdictions seeking to move from T+2 to T+1. Drawing on lessons from transitions in India, the United States, Canada and Latin America, the paper highlights seven imperatives: early operational preparedness through technology investment, automation and testing; close collaboration between regulators and market participants; greater use of Straight-Through Processing and real-time data reconciliation; strengthened liquidity management to manage faster cash and securities movements; regulatory alignment supported by clear guidance, realistic timelines, flexibility, phased rollouts and protocols for exceptions and fails; careful cost planning, particularly for smaller firms and CCPs; and management of cross-border frictions from misaligned settlement cycles, time zones, FX and products such as ETFs. The WFE also cautions against moving beyond T+1 without clear justification and market readiness, framing T+1 as a cost-benefit decision that must balance potential margin reductions against the role of centralised infrastructure and multilateral netting in supporting liquidity.
World Federation of Exchanges 2025-06-16
World Federation of Exchanges publishes global guidance for transitions from T+2 to T+1 settlement
The World Federation of Exchanges has issued guidance on transitioning securities settlement cycles from T+2 to T+1, emphasizing operational readiness, regulatory collaboration, and liquidity management. The guidance draws on global experiences and advises against moving beyond T+1 without clear justification, highlighting the need for careful cost planning and management of cross-border frictions.