In our first article, ‘5 critical points for T+1 Europe: Scoping as the first step’, we looked at the basics: How can banks realistically assess the overall scope of a T+1 project? Now we turn to the second success factor: dependencies. This is where it becomes clear why T+1 is such a mammoth project for many decision-makers.
At first glance, the interdependencies seem so complex that one has to ask: where should one even begin? Regulatory requirements, international standards, market infrastructures and parallel large-scale projects create a dense network of dependencies that is difficult to navigate without a clear strategy.
The regulatory framework: Clarity with new questions
On 17 September 2025, the Council and Parliament published the compromise text amending the CSDR. This establishes the legal basis for T+1 and confirms the transition date of 11 October 2027. The text also contains precise specifications, such as:
- an exception for certain securities financing transactions (SFTs),
- the possibility of a temporary adjustment of cash penalties if unexpected risks arise during the migration.
Regulatory clarity is an important milestone. At the same time, it is clear that the real challenge lies not in the ‘if’ but in the ‘how’ of implementation.
External stakeholders and market fragmentation
Europe differs fundamentally from markets such as the US: There are 24 central securities depositories (CSDs) in the T2S network, as well as international CSDs and local market infrastructures. Different cut-off times, varying corporate action standards and tax procedures mean that every bank inevitably has to work with a whole host of external stakeholders.
A recently published article by Deutsche Bank sums it up: Market fragmentation is one of the biggest risk factors for T+1. This is precisely why the roadmap of the EU T+1 Industry Committee focuses on uniform gating events and a harmonised operational timetable.
In its report on market barriers (September 2025), AMI-SeCo also emphasised that post-trade processes in Europe are still burdened by national differences. T+1 thus becomes a litmus test: can dependencies between markets, infrastructures and regulations be coordinated in such a way that an efficient overall process is created?
Standards as a connecting link: ISO 20022
One of the biggest levers is the standardisation of data and process communication. ISO 20022 has been considered the standard of the future for years – richer in data, better suited for automation and straight-through processing. The European Securities and Markets Authority (ESMA) emphasises that the messaging standard is the technical key to a successful transition to T+1 in European securities trading, as it enables the necessary automation of post-trade processes.
However, the status is not clear: ISO 20022 has been technically implemented in post-trade, but is not yet widely used. Many players continue to use ISO 15022 or hybrid formats. The T+1 roadmap itself refers to the parallel use of both standards until the transition is complete.
Securities institutions should therefore definitely consider migrating to ISO 20022 as part of their T+1 projects. The standardisation of communication standards is a basic prerequisite for accelerating processes, reducing dependencies and avoiding media breaks.
The International Securities Services Association (ISSA), which has been working intensively for years to prepare for the implementation of ISO 20022 in securities settlement, offers guidance in this area. Its white paper ‘Market Considerations and ISO 20022 Migration Approaches for Securities’ contains practical recommendations on how markets can successfully manage the transition.
Side note: The ISSA maintains both a working group on ISO 20022 implementation and the ‘Accelerated Settlement Working Group’, which offers a self-assessment of T+1 readiness – available at issanet.org.
Parallel projects: Fontus and UNO
Needless to say, the T+1 transition is not happening in a vacuum. Several major market initiatives are running in parallel and overlapping in terms of timelines and resources:
- Fontus: As our recent analysis shows, the milestones of T+1 and Fontus overlap at critical points. Master data provision in particular is a bottleneck – a delay on one side has a direct impact on the transition to shortened settlement.
- UNO: The Clearstream project is also highly relevant for banks. The parallel transition of settlement processes requires careful planning to avoid bottlenecks in IT, resources and testing capacities.
These examples show that dependencies are not just abstract risks, but tangible project conflicts.
Operational dependencies in day-to-day business
In addition to the ‘big chunks’, there are a multitude of operational details that determine success or failure:
- Multiple settlement runs per day: Accelerating the settlement cycle requires internal systems and external interfaces to be synchronised multiple times during the day.
- Intraday WM data supply: Especially with class data, delayed import can lead to chain reactions – even settlement fails.
- Standard Settlement Instructions (SSIs): Updating and harmonising SSIs is even more critical in a T+1 environment. Any break in the process means a bottleneck that is difficult to resolve the following day.
The roadmap therefore emphasises the need to consistently replace manual steps with automation and to implement straight-through processing in all process chains.
T+1 as a technical challenge: insights from SIBOS
Another area that is heavily influenced by dependencies is FX. At SIBOS in Frankfurt, it became clear that FX professionals cannot ignore T+1. Every securities transaction involving foreign currencies entails tight settlement timelines – and thus the need to reconcile FX payment flows in near real time.
A clear conclusion from our discussions with various market players is that shortening the settlement cycle cannot be achieved through organisational measures alone. A clear technical approach is needed: automation, real-time data and harmonised interfaces are the prerequisites for mastering dependencies in the interaction between securities and FX settlement.
Conclusion: actively manage dependencies
The multitude of dependencies can seem overwhelming – and that is precisely where the danger lies. Those who limit T+1 to their own project fail to recognise the close interconnection with regulatory requirements, international standards, market practices and parallel initiatives. The good news is that dependencies are not an insurmountable obstacle, but rather a to-do list for project planning. They can be structured and prioritised – from stakeholder management and standardisation initiatives to detailed operational work.
After scoping, this is the second key step on the path to T+1: systematically recording dependencies and integrating them into your own project plan.
In the next articles in our series, we will focus on the other success factors: Implementation, Legacy IT and Testing.
