Gary Gensler, chairman of the U.S. Securities and Exchange Commission, said on Thursday that Britain should set and meet a deadline for cutting in half the time it takes to settle stock trades.
Britain’s stock markets need to halve the time it takes to settle trades on the London Stock Exchange and other platforms by the end of 2027 at the latest, to follow Wall Street’s move last month to complete stock trades within one business day (T+1).
Canada and Mexico also moved to T+1 last month to reduce market risk and save on trading costs.
The European Union has said the move from T+2 to T+1 is a matter of “when” rather than “if”, and some industry players would like the UK and EU to synchronise the transition given the interconnected nature of the markets.
Gensler said at an event in London hosted by banking industry group UKFinance that the U.S. measures had reduced the average margin required by clearing houses by 25-30 percent in the first two days, worth about $3.8 billion.
Moreover, settlement failure rates did not increase, defying expectations, Gensler said.
“It went smoothly,” Gensler said via video link.
Gensler said one of the key lessons learned was the need for same-day confirmation of trades in advance.
“I won’t hesitate to say how important it is to set a date and stick to it,” Gensler said.
“Unless we do that, there will still be a lot of debate.”
Gensler said that if the UK took as long to plan and implement as the US, the country would make the switch by mid-2026.
Charlie Geffen, who led a report on the transition to T+1 commissioned by the UK government, said there was “no need to rush desperately” to finalise the details of the transition as views would change.
“But it’s essential to maintain momentum, and 2027 is the latest deadline,” Geffen said.
“We now have a clear policy and a deadline, and if there’s anything I’m worried about, it’s that … we’re going to lose momentum,” Geffen added.
The move to T+1 is seen as a precursor to same-day settlement for stocks, which is already in place in China for A-shares.
Spend your money wisely: The Globe Investor newsletter delivers the latest investment news to your inbox three times a week. Sign up today.
