The U.S. capital markets’ shift from a T+2 to a T+1 settlement cycle stands as one of the most consequential changes in recent market infrastructure, yet according to Rich Robinson, Chairman of ISITC, the transition has been strikingly smooth across the industry.
For many firms, the change has done more than shorten settlement timelines—it has triggered deeper technological, operational, and strategic transformations. “There has been no major concerns or issues raised by any of the buy or sell side community regarding US migration to T+1,” said Robinson.
“The overall sentiment still stays the same as the migration was completely seamless and well managed at the industry level,” he told Traders Magazine.
While the operational switch to T+1 was largely successful, the implications of this shift continue to ripple across financial firms of all sizes and types. Institutions are now adapting to a new cadence of post-trade activity, reengineering long-standing workflows, and reevaluating risk models and technology strategies to stay competitive under the compressed cycle.
For many firms, the transition has catalyzed the adoption of new technologies that were long overdue. Rather than continuing to rely on downstream fixes for settlement failures or trade breaks, organizations used the T+1 deadline as a forcing function to address inefficiencies at their source.
“The transition to T+1 was seen as an opportunity to fix the exception at the root cause rather than working through the life cycle,” Robinson explained. “The core focus for many firms was to adopt systemic confirmation platforms and enhance their exception management workflow.”
Robinson emphasized that real-time data capabilities have become a critical enabler in this new environment. Firms that invested in real-time data processing are now better positioned to manage the full trade lifecycle—from trade booking through to settlement—without relying on the slower batch-based systems that once dominated back-office operations.
Yet even with these advancements, the move to T+1 has revealed important gaps in existing infrastructure. Notably, inventory management has emerged as a persistent challenge—one that the new settlement cycle has not resolved.
“The problem that T+1 did not remediate was inventory management, which continues to be a key reason for fails,” said Robinson. “Transparency regarding custody locations is critical for buy-side firms to provide accurate settlement instructions. We see this as a scope for improvement at the industry level and, given the rest of the markets are moving forward, we see this as a critical opportunity to address.”
Inventory visibility becomes even more important in the context of cross-border activity, where firms must coordinate across different time zones, asset servicing windows, and market infrastructures. These constraints introduce more complexity, particularly for firms managing multiple custodial relationships or operating across asset classes.
In addition to highlighting infrastructure weaknesses, the shift to T+1 has increased operational pressure and compressed the timeline for managing a host of risks—including intraday liquidity, operational, and counterparty risk.
“The move to T+1 has increased time pressure across all facets of post-trade processing,” Robinson said. “Firms now have significantly less time to resolve issues before settlement, particularly in cross-border scenarios.”
This acceleration has led many institutions to reevaluate their intraday liquidity strategies. For firms dealing with global clients or markets, pre-funding models have become more common to ensure timely settlement. The ability to forecast and manage liquidity across different currencies and jurisdictions is now a competitive differentiator.
Operational risk has also come under sharper focus. Previously manageable manual processes—like securities lending recalls, FX conversions, or block trade allocations—now pose greater threats to timely settlement. Errors or delays in these areas can lead directly to failed trades, regulatory scrutiny, or reputational damage.
“While broker-to-broker flows are relatively automated, the investment manager-to-broker workflows are far more complex and prone to bottlenecks,” Robinson said. “Firms are responding by working more closely with custodians and fund administrators to ensure alignment and reduce exceptions.”
These evolving demands have led many firms to revisit their risk and compliance frameworks. Investment managers, in particular, are reevaluating both the operational protocols and compliance checkpoints built around the former T+2 cycle.
“Yes, particularly among investment managers and their custodians,” Robinson said when asked whether risk models had been updated. “The compressed timeline has prompted a reexamination of both compliance checkpoints and operational protocols.”
Larger firms, which typically have more automation and in-house technology resources, were generally better prepared for the shift. Smaller and mid-sized firms, on the other hand, often rely on legacy systems or manual workflows that were already under pressure under T+2. For some, the solution has involved operational workarounds—such as negotiating bilateral settlement timelines that still follow T+2 under certain conditions.
“The emphasis is on building more resilient communication and exception management frameworks,” said Robinson. “Many firms are leaning more heavily on custodial support or third-party solutions to fill in operational gaps.”
As the dust settles post-transition, different industry sectors are taking stock and adjusting accordingly. Broker-dealers, whose exchange-based operations were already highly automated, have generally adapted well. In fact, Robinson notes that much of the original planning and analysis around T+1 focused on the broker-dealer community, including the potential for lower clearing fund requirements and better capital utilization.
However, the asset management sector has faced a steeper climb. Asset managers must coordinate across a broader range of functions—securities lending, FX, custodial services, and fund administration—all of which involve external dependencies and time-sensitive coordination.
“Custodian banks have played a critical role in helping smaller firms adapt by creating portals and tools that simplify settlement processing,” said Robinson. “Despite these efforts, challenges remain in achieving full straight-through processing, especially when firms must manage multiple systems or interfaces.”
One bright spot amid the complexity has been a noticeable increase in industry collaboration. Robinson credits this coordination as one of the key reasons the U.S. transition was so successful—and he sees it as a template for global markets preparing for similar changes.
“One of the more positive outcomes of the T+1 transition has been the level of collaboration between regulators, market infrastructure providers, custodians, and buy-side firms,” Robinson said. “Organizations like ISITC helped coordinate education efforts and share best practices across the industry.”
He also highlighted the roles of regulators and key infrastructure providers such as DTCC, who worked closely with firms to provide readiness tools, testing frameworks, and communication channels. For global markets like the UK and EU, which are preparing for their own T+1 implementations, this collaborative model is likely to serve as a best-practice reference.
Looking ahead, industry conversations are beginning to explore the potential for T+0 settlement. But Robinson remains pragmatic about what it would take to get there.
“From an industry-wide perspective, T+0 is not viewed as a practical near-term goal—particularly when it comes to cross-border settlement,” he explained. “While broker-to-broker transactions may someday support T+0 due to their streamlined and automated nature, investment manager workflows involve far more moving parts and manual interventions.”
Even with advanced technologies like distributed ledger platforms or AI-powered trade processing, the need for human oversight remains. Issues like FX conversion mismatches, last-minute block allocations, and securities lending recalls still require timely human resolution.
“Even with DLT or AI-enhanced infrastructure, if an error occurs, someone still needs to investigate and fix it,” Robinson said. “Until these processes are fully automated across all participants and jurisdictions, T+0 remains aspirational rather than achievable.”
Still, the move to T+1 has demonstrated that large-scale operational change is possible when the industry aligns on a shared objective. With momentum now building in other global markets, and with the lessons of the U.S. transition fresh in mind, the financial industry appears better equipped than ever to take on the challenges—and opportunities—of the next evolution in settlement practices.
