When the US and Canadian markets reduced their trade settlement window to just one day, the move promised faster trade finality and reduced counterparty risk. However, for financial firms across Europe and Asia, this change has sparked a logistical scramble, compressing timelines, inflating costs, and straining cross-border trade operations like never before.
T+1: A Reform Born in Crisis
The transition to a T+1 settlement cycle was triggered by market volatility during the COVID-19 pandemic and the meme stock frenzy, which exposed the fragility of the previous two-day settlement system. In response, US regulators pushed for a faster cycle to limit risk. According to research by Vermiculus and GreySpark Partners, this shift has set off a chain reaction for global firms with exposure to American markets.
Source: Vermiculus and GreySpark Partners
While North America, Argentina, and India now operate on a T+1 basis, most of the world—including the EU, UK, Singapore, and Hong Kong—still adheres to a T+2 cycle. This divergence means that firms operating across borders must now reconcile vastly different trade deadlines.
Europe’s Compressed Clock
For UK and EU firms trading in U.S. markets, the time available to finalize trades has been cut nearly in half. This shift forces firms to either stretch working hours into the night or reconfigure operations to include global teams. Smaller firms without international coverage face higher risks of settlement failure—and heavier costs to avoid it.
Allocating and affirming trades by 21:00 ET on the trade date is now mandatory, creating a serious overlap problem for firms in Europe and Asia, where business hours end before U.S. markets close. European firms now have just three working hours to process trades, compared to ten under the previous regime.
Asia Faces a Tougher Challenge
In Asia, time zones prove even more unforgiving. Japanese firms, for instance, must now process U.S. trades after local business hours. The working-hour overlap is nonexistent, and without night shifts or relocated operations, these firms risk missing settlement deadlines altogether.
The FX dimension adds to the stress. Many APAC institutions are being forced to pre-fund trades or outsource foreign exchange processes due to tight timeframes and unfavorable conversion rates.
Toward Real-Time Trading?
Nasdaq and the Intercontinental Exchange are betting on even longer trading hours. Nasdaq plans to roll out a 24/5 schedule by late 2026, targeting global investors accustomed to the always-on crypto markets. Digital asset markets offer real-time settlement and 24/7 trading—features that traditional markets are slowly inching toward.
The U.S. T+1 rule may be a step in that direction. The EU and UK plan to shift to T+1 by October 2027. However, their fragmented market structures mean their transition may prove even more complex. In the meantime, global firms must consider whether to build costly night operations or embrace automation to survive the faster pace set by North America.
“The move to T+1 is a significant step towards real-time trading, but it presents unique challenges for firms operating across different time zones,” said an industry expert.
As the world watches North America’s bold move, the financial industry must adapt to these new realities or risk falling behind in an increasingly fast-paced global market.