by Philip Flood, Global Business Development Director – Regulatory and STP Services, Gresham

Across capital markets, settlement cycles are tightening. North America shortened its standard timetable from T+2 to T+1 in May 2024, aiming to curb counterparty risk and raise efficiency. Momentum is spreading: India expects to introduce an optional end-of-day settlement path in 2025 as a bridge to same-day clearing, while European regulators weigh up a comparable shift.

The move to T+1 has been a significant jolt for many organisations. A large number of firms continue to rely heavily on overnight batch processing, manual spreadsheet updates and disconnected systems, putting pressure on the time they have available to confirm trades, secure funding, and complete reconciliation. Real-time trade matching and reconciliation remain rare exceptions rather than common practice. In an environment where every second counts, these delays represent a considerable risk, especially as we are seeing regulators imposing ever-tighter deadlines.

Europe’s shift to T+1 is far more complex than the US journey.  The continent’s market infrastructure is much more fragmented, with 18 central clearing counterparties (CCPs) and 31 central securities depositories (CSDs), compared to the US’s single CCP and two CSDs. Compounding matters further, many European securities are dual-listed, settling through more than one CSD, adding complexity to coordination efforts.

Regulatory difficulties ramp up the problem still further. The EU’s Central Securities Depositories Regulation (CSDR) mandates buy-ins and enforces penalties for settlement failures. Unfortunately, therefore, moving to a T+1 cycle could increase settlement failures and thus the costs for market participants. This risk has contributed to delays in rolling out tougher settlement rules.

The UK faces a similarly nuanced path. Post-Brexit, it chose to opt out of the EU’s buy-in rule but maintains a settlement framework closely aligned with CSDR. The government’s Accelerated Settlement Taskforce has warned that rushing ahead of the EU schedule could amplify cross-border risks. Therefore, coordination between London and Brussels remains essential to avoid market disruption.

Laying the foundations

While firms are navigating the shift to T+1, groundwork for T+0 settlement is already underway. Modern event-driven data architectures enable each trade to initiate immediate processing and reconciliation workflows, minimising error windows, while cloud platforms built for scalability handle transaction surges while offering continuous, real-time analytics on risk, compliance, and operational performance.

In addition to this, standardising messages through ISO 20022, and replacing bespoke links with open APIs help smooth interactions across the post-trade landscape. Critically, continuous automated reconciliation at scale has become achievable. State-of-the-art cloud-native platforms can reconcile large volumes of multi-asset trade data almost instantly, supported by low-latency connections for near real-time confirmation processing.

Despite these advancements, T+1 and T+0 represent fundamentally different operational models. Under T+1, firms benefit from an overnight window to complete affirmation, netting, funding, and reconciliation. With T+0, that buffer disappears entirely. The biggest challenge becomes ensuring payment finality. Traditional high-value payment systems such as Fedwire and TARGET2 are not designed for 24/7 operation, closing overnight. Instant, atomic settlement demands funds that are available and final at any time, without delay.   

This is where central bank digital currencies (CBDCs) and regulated stablecoins come into play. Both are now actively being explored as solutions capable of enabling real-time settlement by allowing immediate, irrevocable cash transfers.

Understanding the infrastructure challenge

Distributed Ledger Technology (DLT) is widely seen as a key enabler for T+0 and atomic settlement. By delivering a shared and immutable ledger, DLT minimises reconciliation efforts, enhances transparency, and facilitates the use of smart contracts to automate settlement processes.

Industry groups like the Securities Industry and Financial Markets Association (SIFMA) have highlighted these possibilities in their reports. Their work examines how DLT can reduce settlement failures and support delivery-versus-payment (DvP) settlement in real time. They emphasise that DLT’s benefits grow exponentially with broad, industry-wide adoption rather than isolated deployments.

Despite this growing enthusiasm, regulatory uncertainty remains a major barrier to widespread adoption of DLT and digital assets. Questions persist about the legal recognition of tokenised securities, the handling of tokenised cash, and how these technologies fit within existing regulatory frameworks. Many institutions approach these innovations cautiously, especially since major systemic changes may conflict with established compliance practices.

On the sell side, global custodians, infrastructure providers, and large firms have been more active, engaging in proof-of-concept projects, consortia, and bilateral experiments with DLT-based settlements. Meanwhile, the buy side, particularly smaller asset managers, often lack the resources or internal expertise to modernise systems in tandem. Email confirmations, legacy APIs, and siloed data remain widespread, creating frustrating bottlenecks, at a time when speed and accuracy are so urgently needed.

Always-on operations

With T+0, settlement processes no longer pause at the end of the business day. Firms will need to adopt 24/7 operational capabilities. That means they need new staffing models, intraday liquidity management, and systems capable of managing real-time exceptions while maintaining risk controls without the benefit of batch netting. The liquidity and collateral efficiencies enabled by netting windows in T+2 and T+1 may be significantly reduced.

In short, while T+1 can be achieved by upgrading existing infrastructure, T+0 demands a complete rethinking of the post-trade environment. Distributed ledgers and digital currencies are central components, but their successful deployment depends heavily on regulatory clarity, cross-market interoperability, and coordinated industry efforts. As SIFMA and other authorities have noted, this transition is not simply an upgrade; it represents a fundamental change.

Should the industry embrace T+0?

The benefits of T+0 are clear: immediate settlement, reduced counterparty risk, and continuously accurate position reporting. However, these advantages come with significant challenges.

Settling trades instantly requires funds to be available upfront, which can be difficult for many participants – especially retail investors who often rely on slower payment mechanisms. Maintaining prefunded accounts may lead to lower returns or greater risk of overdrafts. Additionally, this shift complicates activities such as securities lending, repurchase agreements, and margin management. The operational leeway provided by settlement windows would disappear, making the transition potentially risky and costly for some firms, particularly smaller ones.

That said, the pressure to modernise is only increasing. T+1 is more than a compliance deadline – it’s an opportunity to rethink post-trade processes for speed, resilience, and transparency.

Firms that invest now in instantaneous trade matching, always-on reconciliation and automated exception handling are already lowering risk and freeing liquidity – benefits that accrue whatever the ultimate settlement deadline becomes.

Same-day settlement may still sit on the horizon, but every incremental upgrade to cloud-native architectures, API-driven workflows and event-based controls draws it closer to daily practice.