UK Financial Watchdog Endorses Faster Fund Settlement to Boost Market Efficiency

The Financial Conduct Authority has endorsed accelerated settlement cycles for UK fund transactions, aligning with broader market shifts toward T+1 settlement in European equities and bonds. This regulatory nod follows a joint statement by major investment associations advocating for reduced settlement times.

Current T+3/T+4 fund settlement periods will compress to T+2 for authorized funds predominantly invested in T+1 markets. The FCA emphasizes this operational change will enhance liquidity, improve market efficiency, and strengthen the UK’s competitive position - benefits that should ultimately trickle down to retail investors.

While full T+1 adoption for fund units remains operationally challenging, the MOVE demonstrates regulators’ growing emphasis on settlement infrastructure modernization. The October 2027 timeline for listed securities settlement acceleration creates natural pressure for fund managers to streamline their back-office processes.