T+1 and T+2 settlement
T+n is shorthand for the number of business days between the trade date (T) and the settlement date, when money and assets change hands. FX spot trades settle within two business days, while US securities moved to T+1 in May 2024 and EU and UK securities follow on 11 October 2027.
How it works
The BIS defines an FX spot trade as one agreed for value within two business days, and counts T+0 and T+1 trades as spot. Anything later is an outright forward. The Basel Committee describes FX spot as delivery according to local market convention, for example two business days.
Securities cycles are getting shorter. The SEC moved most US broker-dealer transactions from T+2 to T+1, with a compliance date of 28 May 2024. Regulation (EU) 2025/2075 brings T+1 to the EU from 11 October 2027, and the UK plans the same date through an amendment to UK CSDR.
For payment treasury, T+n sets when converted currency arrives. A dollar to peso spot trade agreed on Wednesday settles on Friday, and a holiday in either currency pushes it later. Shorter securities cycles also leave investors less time to buy the currency they need to settle cross-border trades.
Example
A firm buys MXN 50,000,000 against dollars on Wednesday at 18.20, for $2,747,253, with value on Friday (T+2). Payouts due on Thursday cannot use those pesos, so Thursday's needs must come from existing balances or a separate T+1 or T+0 trade at a different price.
Frequently asked questions
Can FX spot settle on the same day?
Yes, where both sides agree and the currencies' markets allow it. The BIS counts T+0 and T+1 trades as spot.
When do EU and UK securities move to T+1?
On 11 October 2027, under Regulation (EU) 2025/2075 in the EU and an amendment to UK CSDR in the UK.
Where Polynopsis fits
Polynopsis keeps a conversion or transfer in flight until it settles, so money with a later settlement date is not counted as available today.
Compared with
Related terms
Sources
- Triennial Survey reporting guidelines for turnover in April 2025 · Bank for International Settlements
- Basel Framework, RMA20: Foreign exchange risks · Basel Committee on Banking Supervision
- SEC Finalizes Rules to Reduce Risks in Clearance and Settlement (15 February 2023) · U.S. Securities and Exchange Commission
- Regulation (EU) 2025/2075 amending Regulation (EU) No 909/2014 as regards a shorter settlement cycle in the Union · EUR-Lex, Publications Office of the European Union
- Policy note: Mandating T+1 settlement in the UK · HM Treasury
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About Polynopsis
Polynopsis is liquidity management software for cross-border payment companies. The name joins poly, many, and synopsis, a seeing together: one live view of money spread across many banks, payout partners, exchanges and stablecoin wallets, including money in flight, with a warning before any corridor runs dry.
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