World Federation of Exchanges Releases Global Guidance on Managing Transitions to T+1 Settlement

 

PRESS RELEASE

World Federation of Exchanges Releases Global Guidance on Managing Transitions to T+1 Settlement

London, 16th June 2025 – The World Federation of Exchanges (WFE), the global industry association for exchanges and central counterparties (CCPs), has published industry-wide guidance on the complex mix of operational, regulatory, and strategic considerations for shortening securities settlement cycles.

The paper draws on lessons learned from recent transitions in markets including India, the United States, Canada, and Latin America, and offers a roadmap for jurisdictions seeking to move safely and efficiently from T+2 to T+1 settlement. 

In publishing the guidance, the WFE emphasises the importance of thorough industry collaboration, operational readiness, and technological investment to ensure successful implementation and warns against premature moves beyond T+1 without clear justification and market preparedness.

The guidance identifies seven key imperatives for a successful transition to T+1:

1. Operational Preparedness: Firms that invest early in technology, automation, and testing face fewer disruptions during transition. Proactive preparation is essential.
2. Collaboration: Close coordination between regulators and industry participants is vital. Standardised protocols and open communication help ensure consistent timelines and processes, while ongoing communication between stakeholders ensures rapid resolution of emerging issues.
3. Technology & Automation: Straight-Through Processing and real-time data reconciliation are critical enablers of accelerated settlement, removing bottlenecks caused by manual interventions.
4. Liquidity Management: T+1 impacts cash and securities availability. Enhanced cash forecasting and continuous monitoring are needed to avoid settlement failures.
5. Regulatory Alignment: Clear guidance, realistic timelines, and regulatory flexibility combined with phased rollouts and pilot programs, have proven successful in allowing firms to adapt progressively, while clear protocols for handling exceptions and fails helps to minimise systemic risks during the transition period.
6. Cost Considerations: Upgrading infrastructure carries significant costs, especially for smaller firms and CCPs. Careful planning is needed to ensure benefits outweigh expenses, and rushed transitions will be more expensive than methodical ones, as well as being less risky in terms of project completion.
7. Global Implications: Misaligned settlement cycles and time zone differences create challenges for cross-border trades, related FX transactions, and instruments like ETFs. 

Richard Metcalfe, Head of Regulatory Affairs at the WFE, commented, “We urge regulators and market participants to engage in structured, phased transitions supported by clear roadmaps, robust cost-benefit analysis, and inclusive governance structures.”

Nandini Sukumar, CEO of the WFE, commented, “It is vital to look at T+1 as a cost-benefit question. The powerful effect of multilateral netting, which can only be achieved through centralised market infrastructure, has clear advantages. So, while shortening the settlement cycle can reduce margin requirements, there is a balance to be struck and, as our paper makes clear, the costs of going further would include compromising market liquidity.”

Read the full paper here.

For more information, please contact:

Cally Billimore                

Communications Manager        

[email protected]

+44 7391 204 007

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some $1.1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges, together with other exchanges feeding into our database, are home to over 49,000 listed companies, and the market capitalisation of these entities is $116.58 trillion; around $155 trillion (EOB) in trading annually passes through WFE members (at end 2024). 

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system. 

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system. 

Website: www.world-exchanges.org

X: @TheWFE

---