With the shift to T+1 set for October 2027, APAC firms face mounting operational challenges, especially in managing time zone differences and FX processes.

Financial firms across the Asia‑Pacific region are bracing for significant operational pressures as the UK, EU and Switzerland prepare to transition to a T+1 settlement cycle in October 2027. The compressed timelines are expected to create particular strain around time zone coverage and FX workflows for Asia-based institutions.

While the US move to T+1 in May 2024 progressed smoothly, the European shift presents a more complex challenge for APAC firms, according to Val Wotton, Managing Director and Global Head of Equities Solutions at The Depository Trust & Clearing Corporation (DTCC).

The biggest hurdle is the time zone gap. Unlike the US implementation – where Asian firms could address breaks the following morning – the European schedule allows far less flexibility, creating pressure around allocation and settlement cut-offs late into the Asia evening.

“The reality is that the time zone difference that Asian firms face is challenging, given we're looking at cut-offs between 11pm and midnight for the UK and EU, both from an allocation and a settlement perspective,” Wotton said in an interview with Regulation Asia.

This forces Asian firms that trade in European markets to make critical decisions about their operating models. The options include running evening shifts, establishing a resource presence within the European time zone, or leveraging an outsourced provider. Wotton noted that some large institutions are already running significant evening shifts.

Automation is key

To navigate these challenges, DTCC is advocating for a profound shift away from manual processes towards greater automation. Wotton stressed that this is a "real opportunity, especially in Europe, for firms to really invest for the future" and move from legacy batch cycles to real-time processing.

Many post-trade processes today remain surprisingly manual, creating risks that will be amplified in a compressed settlement cycle. “Unfortunately, there are firms that still use faxes to exchange confirmation and settlement instructions (SSI) details,” Wotton said.

The common manual workflow typically involves exchanging spreadsheets or faxes to agree on block trades and their subsequent allocations. This is often followed by a "callback" process to verbally verify cash SSIs to prevent fraud – a time-consuming procedure involving multiple staff members that is untenable in a T+1 environment.

DTCC has positioned its CTM^® and ALERT^® platforms as key solutions. CTM, a central matching service used globally in more than 89 countries, automates the trade confirmation and allocation process. ALERT serves as an online global database for the maintenance and communication of account SSIs, eliminating the need for manual callbacks. To further drive adoption, DTCC is also launching a "T+1 enablement package" for smaller firms that are impacted by the forthcoming EU and UK rules, allowing them to upload spreadsheets directly into the CTM workflow.

Industry adoption of these platforms has continued to grow, with DTCC recently announcing that major prime brokers including Societe Generale, BNP Paribas and JP Morgan have adopted CTM’s automated tri-party matching workflow to streamline communications with hedge funds and executing brokers.

“Everything for us is around how can we automate the process, drive straight through processing, and reduce some of the latency and inefficiency that may exist within today’s market,” Wotton said.

European complexity and Asia's path

The European market structure adds another layer of complexity for Asia-based firms. While the US and UK each have a single central securities depository (CSD), continental Europe has a fragmented landscape with 39 CSDs across the region.

To address potential settlement issues, DTCC will mandate that the "place of settlement" be submitted within CTM for all trades by September 2026, in line with recommendations from the EU T+1 Industry Committee. This aims to ensure trading parties agree upfront on where a transaction will settle, reducing downstream breaks.

Meanwhile, most Asian markets are taking a "wait and see" approach to their own T+1 timelines, preferring to observe the European transition first. Wotton noted that Asian markets are already highly efficient with low fail rates, making the driver for T+1 more about global alignment than fixing local settlement problems.

Hong Kong has indicated it is technically ready but will undergo a consultation, while Australia's timeline is tied to its CHESS replacement programme, pushing a potential move to T+1 into the next decade. Japan and Singapore have initiated industry discussions on moving to T+1, but neither has indicated a target timeline for the transition.

For now, the focus for Asia-based firms remains on preparing for the European transition in 2027. Wotton emphasised that the move to T+1 is a "community effort”.

"You're only going to be as strong as your weakest link," he said, urging firms to begin their impact assessments and automation journeys now to ensure they are not left behind.

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This article was produced in partnership with DTCC.