Global T+1 Settlement: Preparing for a Global Shift

In May 2024, North America transitioned to T+1 settlement, reducing the time between trade execution and settlement by one day. Since then, fund managers and service providers have worked through compressed timelines and increased operational demands.

Now, the global landscape is shifting. The UK, European Union, and other regions are preparing for their own versions of global T+1 settlement. For North American funds, this means the next phase of transformation is already underway.

In this post, we share our insights on what’s changed, what’s coming, and as global adoption accelerates how we help clients navigate this global shift.

North America’s First Year of T+1

On May 28, 2024, U.S. markets moved to T+1. Canada and Mexico adopted the same cycle one day earlier. The change required industry-wide adaptation.

Key changes included:

• Trade matching and affirmation must now be completed on trade date.
• FX windows have shortened, increasing the need for pre-funding.
• Custodians tightened cut-off times for cash and securities.
• Manual processes became unsustainable under the new timeline.

Firms that had already invested in automation and straight-through processing (STP) adjusted quickly. Many others faced challenges with trade failures and overnight funding gaps.

Looking Ahead to Global T+1 Settlement

Europe, the UK, and Switzerland are targeting a move to T+1 in October 2027. Other markets in Asia-Pacific are assessing their readiness. This next phase—global T+1 settlement—introduces more complexity for North American funds.

Managers investing across jurisdictions must prepare for tighter coordination, more moving parts, and increased timing risk.

What Global T+1 Settlement Means for North American Funds

1. FX Pressures Will Increase

Today, managers funding U.S. trades from abroad already face FX cut-off risks. A global T+1 cycle reduces flexibility even further. Managers will have limited time to execute, settle, and fund trades in foreign currencies.

Without same-day FX execution and pre-funding strategies, settlement failures become more likely.

2. Time Zone Friction Will Grow

T+1 across regions introduces overlap challenges. A Canadian fund trading in Asia and Europe will need to confirm trades before those markets close—often during overnight hours in North America.

Administrators and service providers must offer coverage and trade monitoring to reduce friction.

3. Trade Failures Will Cost More

As global markets adopt T+1, settlement penalties—already enforced in Europe—will become more common. Managers who miss deadlines due to delayed FX, unmatched trades, or cash shortfalls may face financial consequences.

Real-time exception tracking and proactive escalation are essential in this environment.

How Fund Administrators Can Help

Fund administrators are central to helping managers succeed under global T+1 settlement. At Pinnacle, we support our clients through:

• Trade Matching Support: Ensuring allocations and affirmations meet compressed deadlines.
• FX Coordination: Working with custodians and brokers to support pre-funding and execution.
• Cash Forecasting Tools: Helping managers predict liquidity needs across markets.
• Global Coverage: Offering support in North America and Europe.
• Exception Management: Monitoring, escalating, and resolving trade breaks in real time.
• Client Dashboards: Providing visibility into affirmation status and settlement progress.

Managers rely on administrators not just to process data—but to solve problems before they become critical.

Preparing for the Next Phase: A Readiness Checklist

To succeed in a global T+1 settlement environment, fund managers must act now. Use this checklist to assess your operational readiness:

• Match trades on trade date. Ensure your team completes trade allocations and confirmations before market close.
• Execute FX transactions early. Lock in currency conversions well before settlement deadlines.
• Coordinate with custodians. Align cut-off times for cash and securities across all markets.
• Automate trade workflows. Replace manual processes with straight-through processing wherever possible.
• Accelerate NAV timelines. Adjust your valuation and reconciliation processes to work with tighter settlement cycles.
• Provide round-the-clock coverage. Deploy teams or partners in key time zones to support overnight trading.
• Monitor exceptions in real time. Set up alerts to catch and resolve trade breaks before they cause settlement failures.
• Update vendor agreements. Revise SLAs and service terms to reflect T+1 cutoffs and escalation timelines.

By taking these steps now, you reduce risk and position your fund for success in a global T+1 settlement world.

Industry Collaboration Is Critical

No manager can prepare for global T+1 settlement alone. Custodians, brokers, fund administrators, and FX providers all play key roles in readiness.

At Pinnacle, we collaborate with our clients and their partners to assess risk, improve workflows, and deliver consistent outcomes.

Conclusion

One year into North America’s T+1 regime, the path forward is clear: settlement cycles are shrinking around the world. Managers must adapt to faster workflows, stricter deadlines, and more complex coordination.

At Pinnacle Fund Services, we believe in proactive planning and collaborative execution. As global markets move toward T+1, our role is to help managers stay ready, responsive, and resilient.

If you have any questions about please contact David Smith at [email protected] or 1-604-559-8921.