Faster settlement makes our markets more efficient, improves
liquidity and supports the growth and competitiveness of the UK.
We welcome the statementLink is
external by the Investment Association, Personal
Investment Management & Financial Advice Association, and
Alternative Investment Management Association supporting the
faster settlement of trades in funds.
The settlement period for transactions in listed stocks and bonds
in the UK, Switzerland and EU will change to T+1 from 11 October
2027. 'T+1' means if you buy a stock or bond, it will be settled
within 1 business day. Currently, deals in units of UK funds
investing in stocks or bonds typically settle on T+3 or, in some
cases, T+4.
Faster settlement makes our markets more efficient, improves
liquidity and supports the growth and competitiveness of the UK.
Investors in UK funds should also share in those benefits through
a corresponding reduction in the time taken to settle trades in
fund units. We recognise that the operational practicalities of
fund settlement will not allow all authorised fund managers to
offer T+1 settlement for units in funds.
For UK authorised funds and recognised schemes investing
predominantly in markets that will operate on T+1 settlement, we
believe that moving trades in fund units to T+2 settlement would
be in investors' interests. This would be consistent with
the Consumer
Duty requirement to enable and support retail customers
to pursue their financial objectives.
Funds which currently operate on T+4 settlement should consider
carefully how an extended gap between market settlement and fund
unit settlement would affect investors.
Fund managers and their agents should in future need strong
justification for cases where, exceptionally, more than 2
business days are required to settle trades in units of these
funds - for example, that target investors cannot themselves
settle with the fund on T+2.
Fund managers should determine what's required to move to a T+2
settlement cycle in October 2027 and plan early to deliver this
transition.
