TWSE Market Insights

＜中文版＞

I. Introduction: Global Trend Toward Shorter Settlement Cycles

In recent years, major global capital markets have accelerated the shortening of settlement cycles, moving from T+2 to T+1, with some jurisdictions even exploring the feasibility of T+0.

The primary objective of shortening settlement cycles is to reduce counterparty and systemic risks, lower clearing margin requirements, and improve the efficiency of capital and securities utilization. Amid heightened market volatility and sustained growth in trading volumes, settlement cycle shortening has increasingly been viewed as a key measure to strengthen market resilience and enhance post-trade infrastructure efficiency.

Following India’s implementation of T+1 in 2023, the United States and Canada completed their transitions in 2024, further accelerating global reform momentum. The European Union, the United Kingdom, and Switzerland have announced plans to adopt T+1 in October 2027. Australia and New Zealand may follow as early as 2030. Meanwhile, markets such as Brazil, Türkiye, and Pakistan have also indicated plans to advance similar reforms between 2026 and 2028.

These developments suggest that T+1 is gaining broader global adoption and is likely to become a mainstream model in the evolution of global settlement systems.

II. Global T+1 Implementation: Adoption Expanding Across Major Markets

1. Markets That Have Implemented T+1 

Several major markets have completed the transition to a T+1 settlement cycle, including India (January 2023), followed by the United States, Canada, Argentina, and Mexico (May 2024).

Among these, the experiences of the United States, Canada, and India have become important reference points for global settlement reform.

• United States: Margin Pressures as a Key Driver

The transition to T+1 in the United States was largely driven by heightened margin requirements during periods of significant market volatility. Increased clearing margin demands placed funding pressure on market participants and highlighted the risk exposure associated with longer settlement cycles under stressed conditions. Shortening the settlement cycle was therefore viewed as a practical measure to mitigate post-trade risk and reduce margin requirements.

The reform process was initiated by industry participants and subsequently advanced through coordination with regulators. The Depository Trust & Clearing Corporation (DTCC) launched feasibility studies in 2020 and published a white paper in 2021, laying the groundwork for broader industry consultation. Working groups were established to address operational adjustments relating to trade confirmation, securities lending, foreign exchange, and liquidity management. The U.S. Securities and Exchange Commission (SEC) later proposed regulatory amendments in 2022, and the T+1 framework officially went live on May 28, 2024.

Initial observations indicate that the transition proceeded smoothly overall. Settlement fail rates did not increase materially, and clearing margin requirements declined following implementation. However, the compressed timeline has increased operational demands, requiring continued investment in automation and process enhancements, particularly in trade affirmation, securities lending, and funding coordination. Adjustments by market infrastructure providers — including extended processing windows by the Depository Trust Company (DTC) and expanded foreign exchange services by CLS — also reflect the broader infrastructure implications of the reform.

• Canada: Closely Linked to the U.S. Market, with Coordinated Adoption

Canada’s transition to T+1 was closely aligned with that of the United States, reflecting the strong cross-border integration between the two markets. Given the significant volume of cross-border trading and cross-listed securities, maintaining a consistent settlement cycle was considered important for operational efficiency. Canada therefore adopted T+1 concurrently with the United States in May 2024.

The transition was supported by coordination among market participants, system enhancements by clearing institutions, and corresponding regulatory adjustments. Initial implementation results suggest that market operations remained stable, with no material increase in settlement fail rates and a decline in clearing margin requirements following the transition.

• India: Phased Implementation with Consideration of Retail Market Dynamics

India’s approach to T+1 differed from that of the United States and Canada, where margin-related considerations were more prominent. In 2021, the Securities and Exchange Board of India (SEBI) permitted exchanges to shorten the settlement cycle from T+2 to T+1 following market consultation. Although SEBI did not formally specify detailed policy motivations, market analysis generally points to the rapid expansion of India’s retail investor base as an important contextual factor. A shorter settlement cycle was expected to allow investors—particularly retail participants—to access securities and sale proceeds more quickly, thereby improving liquidity and capital utilization.

The transition was implemented in phases. Following concerns raised by foreign institutional investors and custodians regarding foreign exchange arrangements and funding processes, SEBI adopted a gradual rollout beginning with selected securities in February 2022. Full implementation was completed in January 2023.

Following implementation, overall settlement stability remained intact. However, given India’s foreign exchange controls and time zone differences with major global markets, operational windows for cross-border transactions are relatively compressed, which has made pre-funding more common in practice. These factors underscore the need to align settlement cycle reform with domestic market structure, cross-border arrangements, and operational readiness.

2. Markets with Announced T+1 Timelines

Beyond markets that have already implemented T+1, several jurisdictions have announced target timelines for transition. In South and West Asia, the Securities and Exchange Commission of Pakistan (SECP) announced in July 2025 that T+1 would be adopted starting February 2026. Türkiye has also indicated plans to complete testing and implementation preparations by the end of 2026.

In Latin America, members of the Latin American Integrated Market (MILA) — including Mexico, Peru, Chile, and Colombia — initially targeted the second quarter of 2025 for T+1 adoption but later postponed implementation to the second quarter of 2027. Brazil’s stock exchange (B3) has announced plans to introduce T+1 beginning in February 2028.

Europe’s major capital markets have also established clear timelines for T+1 settlement. The European Union, the United Kingdom, and Switzerland have announced plans to implement T+1 in October 2027 to maintain regional alignment. In the UK, the government established the Accelerated Settlement Taskforce (AST) in 2024, which published its roadmap in 2025.

In the EU, the reform process is more complex due to the presence of multiple trading venues, currencies, and cross-border settlement arrangements. In November 2024, the European Securities and Markets Authority (ESMA) published an assessment recommending October 2027 as the target date, noting that T+1 could help reduce settlement risk and strengthen market resilience. The European Commission has also proposed amendments to the Central Securities Depositories Regulation (CSDR), indicating that the reform has entered a phase of policy implementation and infrastructure readiness.

Overall, European market participants consider the success of T+1 to depend on the ability of post-trade processes to adapt to the compressed timeline, together with improvements in straight-through processing (STP) and operational automation. Europe’s experience in implementing T+1 within a multi-currency and cross-border market structure is also expected to provide important insights for the next stage of global settlement cycle reform.

III. Asia-Pacific Region: Careful Assessment and Preparatory Phase

In contrast to markets that have already implemented T+1 or announced clear transition timelines, most Asia-Pacific markets remain in an assessment and preparatory stage. While the global shift toward shorter settlement cycles continues to attract attention, several markets in the region are taking a more cautious approach in evaluating the feasibility and potential implications of a transition to T+1.

One key consideration relates to structural differences in market infrastructure and cross-border participation. Differences in time zones, foreign exchange arrangements, and funding processes may compress operational windows under a T+1 environment, requiring closer coordination among market participants and service providers.

The readiness of post-trade processes and operational automation is also widely regarded as an important prerequisite. In some markets, processes such as trade confirmation, allocation, and exception management still involve manual steps. Without sufficient levels of automation and straight-through processing (STP), a shorter settlement cycle could increase operational pressure and the risk of settlement fails.

Against this backdrop, several markets in the region — including Hong Kong, Korea, Japan, and Singapore — have initiated industry consultations or working groups to assess the potential impact of a shorter settlement cycle. These discussions typically focus on operational adjustments, system upgrades, and cross-border coordination required to support a possible transition.

Overall, while Asia-Pacific markets continue to monitor global developments in settlement cycle reform, most markets are emphasizing careful evaluation and operational readiness before considering further steps toward T+1 adoption.

IV. Key Observations and Supporting Challenges from International Experience

Experience from markets that have implemented or announced plans to implement T+1 suggests that shorter settlement cycles have become an important trend in global securities markets. However, the transition involves more than simply adjusting the settlement timeline, as it requires coordinated changes across post-trade processes, market infrastructure, and operational practices.

Across different markets, the motivations for adopting T+1 vary depending on market structure and policy priorities. For example, the transition in the United States was largely associated with reducing margin requirements and risk exposure, while Canada’s reform was closely linked to maintaining alignment with the U.S. market. In India, market observers have generally associated the reform with the rapid expansion of retail investor participation, while also viewing it as supporting more efficient use of capital and securities.

In addition, international experience highlights the importance of automation and operational readiness in supporting a shorter settlement cycle. Under a T+1 framework, post-trade processes such as trade confirmation, allocation, and settlement instructions must be completed within a compressed timeframe. As a result, higher levels of straight-through processing (STP), as well as effective coordination among market participants, are often viewed as essential for maintaining settlement stability.

V. Conclusion: Clear Trend but Prudent Planning Needed

The global transition toward shorter settlement cycles has become an increasingly prominent trend in international securities markets. Following the implementation of T+1 in markets such as India, the United States, and Canada, a growing number of jurisdictions have announced plans or initiated discussions regarding similar reforms. These developments suggest that T+1 may gradually become more widely adopted.

At the same time, international experience indicates that the transition to T+1 requires careful preparation and coordination across market infrastructure, operational processes, and regulatory frameworks. As market conditions and institutional arrangements differ across jurisdictions, each market must assess its own readiness and cost–benefit considerations when determining whether and how to proceed with T+1.