From T+1 to T+0: The Future of Settlement Efficiency

Why Settlement Cycles Matter

Settlement may feel like a back-office detail, but in reality it is the plumbing that keeps global markets running smoothly. Every transaction must be finalized: cash exchanged between buy and sell sides, securities transferred, risk extinguished. The length of the settlement cycle determines how long market participants carry counterparty risk — and how much capital is tied up in margin requirements.

For decades, U.S. markets operated on a T+3 cycle, settling trades 3 days after the trade date. Then, in 2017, the move to T+2 reduced that lag. In May 2024, the U.S. formally adopted T+1 settlement. Now the industry is already asking: when will we move to T+0, or same-day settlement?

The Challenges Exposed by T+1

The shift to T+1 is far more than a calendar adjustment. It compresses operational timelines and exposes weak points in existing infrastructure

1. Compressed Exception WindowsUnder T+2, firms had an extra day to resolve breaks, misbookings, or missing allocations. With T+1, the window for resolution shrinks dramatically. Overnight batches are no longer sufficient — exceptions must be identified and resolved intraday.
2. Liquidity and Collateral ManagementShorter settlement cycles reduce counterparty risk, but also increase pressure on collateral operations. Treasurers must ensure liquidity and funding are available in real time, across currencies and time zones.
3. Global ComplexityMany global markets still operate on T+2. Cross-border trades require reconciliation across different timelines, creating operational headaches for firms active internationally.
4. Legacy SystemsMost post-trade infrastructure was built for overnight processing. Compressing to T+1 or T+0 strains these systems, forcing firms either to overstaff operations or risk settlement failures.

What T+0 Will Demand

If T+1 is difficult, T+0 will be transformative. Same-day settlement effectively eliminates the safety net of overnight processing. To prepare, firms will need:

1. Real-Time Trade Capture and OTC trade Matching
   • – Trades must be captured, enriched, and, for inter-dealer trading, matched as they are executed.
   • – Allocations must be confirmed intraday, not after market close.
2. Intraday Reconciliation
   • – Exceptions must be detected within minutes, not hours.
   • – Continuous front-to-back monitoring is essential.
3. Liquidity and Funding Visibility
   • – Real-time cash and collateral dashboards will be required to ensure funding is in place.
   • – Integration across multiple currencies and jurisdictions will be critical.
4. Move from EoD Batch-driven processes to Intraday processes
   • – Systems must employ event-driven processing
   • – Be able to scale to cover spikes in market activity
5. Scalability and Performance
   • – Systems must process millions of daily transactions without collapse.
   • – Low-latency infrastructure is essential to prevent bottlenecks.
6. Cross-Border Coordination
   • – With markets on different settlement cycles, firms must dynamically manage mismatches in exposure.
   • – This requires a flexible platform that supports multiple operating models simultaneously.

How 3forge Prepares Firms for the Future

3forge offers the foundation that firms need to navigate T+1 today — and prepare for T+0 tomorrow.

• Real-Time Ingestion and Normalization: 3forge connects to execution platforms, clearing feeds, and internal risk systems, ingesting trades and normalizing formats in real time.
• Continuous Reconciliation: With its in-memory database, 3forge continuously compares trades across systems, detecting exceptions the moment they arise and enabling intraday resolution.
• Liquidity Dashboards: 3forge Web delivers real-time dashboards showing funding, margin, and collateral requirements across global entities, helping treasurers stay ahead of liquidity demands.
• Performance at Scale: Capable of handling over 1 million messages per second, 3forge ensures throughput keeps pace with global trade volumes.
• Flexibility Across Markets: 3forge’s virtualization layer allows firms to harmonize data from markets on different settlement cycles, providing a unified, real-time view of exposure.

Conclusion

The move to T+1 settlement has already tested the operational resilience of market participants. But it is only the beginning. The ultimate destination is T+0, where settlement risk is virtually eliminated — but only for firms with the infrastructure to keep pace.

By unifying trade data, enabling intraday reconciliation, and delivering real-time dashboards for funding and collateral, 3forge provides the technology backbone that makes accelerated settlement achievable.

For firms that want to thrive in the new era of capital markets, the time to prepare is now.