T+1 readiness varies as securities lending faces operational gaps

Chaired by M&G's Nina Moylett, the committee reviewed preparations for T+1 settlement, which industry participants said remained broadly on track for October 2027.

Readiness differed across firms.

Outstanding challenges included securities lending recalls, collateral sourcing, funding, settlement timing, partial settlements and agent lender capabilities.

Members said readiness required scalable operating models, automation, real-time processing and same-day workflows, beyond compliance alone.

The Tax & Regulations sub-committee reported growing operational challenges from national holding-period rules and record-date requirements.

Faster settlement risked amplifying these difficulties without adaptation; members called for greater tax harmonisation and cross-jurisdictional risk monitoring.

Members discussed greater use of central counterparties, collateral efficiency and tokenisation programmes.

Working groups cover repo, collateral mobility, payments, legal frameworks and digital securities issuance, but practical use cases remain a challenge.

A legal case concerning possible re-characterisation of a securities financing transaction as a secured loan raised questions about repo, securities lending and contractual certainty.

Members also noted that mandatory clearing requirements and other regulatory changes could affect lenders, borrowers and investment funds.