The Methodology Already Exists. It Produced Your IBS Maps.
Between 2021 and 2025, firms across the UK financial sectorwent through a rigorous exercise under the FCA and PRA's Operational Resilience framework. They were required to identify their Important Business Services - the services that, if disrupted, would cause intolerable harm to clients ormarket integrity. Then they had to do something harder: map everything that underpins those services. The people, processes, technology, data, and third-party dependencies that must function, in sequence, for that service to be delivered. Then harder still: scenario test against failure. Establish impact tolerances. Prove the service could survive stress within acceptable bounds.
That work took years. It was expensive. For many firms, it was the most granular examination of their own operating model they had ever undertaken.
It is also, structurally, exactly what T+1 readiness requires. The industry is just not looking at it in that light, yet.
Settlement Is a Service. Map It That Way.
The EU UK T+1 Testing Taskforce has identified eight trade flow scenarios that firms need to prepare for: on-exchange cleared trades with and without Power of Attorney, uncleared on-exchange trades, bilateral OTC, securities lending, repos, FX, and corporate events. Each is, in operational resilience terms, a service - or a component of one. Each has an end-to-endflow, a set of dependencies, defined handoff points, and a timeline within which it must complete.
Under T+2, most firms have enough slack in the system to absorb manual interventions, delayed confirmations, and late settlement instructions. Batches run at end of day. Exceptions are resolved the following morning.
Under T+1, that tolerance disappears. The compressed cycle means that the same service - the same people, processes, technology, datainputs, and third-party dependencies - must now complete in half the time. The stress is not an outage. It is not a cyber incident. It is time. And time compression is a stress that IBS mapping is perfectly designed to surface.
Applying the IBS lens to T+1 settlement flows means asking the same questions that operational resilience already demands. Where in the flow does a manual process introduce latency? Which third-party dependencies - custodians, agent banks, counterparties, platforms - have cut-offs that sit inside the new T+1 timeline? Where does the service break when a single upstream input is late? What is the impact tolerance, and at what point does the firm breach it?
These are not new questions. They are operational resilience questions applied to a new stress scenario.
The UK Data Shows Exactly Where the Service Is Breaking Down
The Taskforce is working from UK equity settlement data for September 2025. It is a useful proxy for where the IBS gaps lie.
Settlement instruction submission reaches 91.5% by end of T, rising to 99% by T+1. CSD matching rates are 86.6% by end of T, rising to 98.4% by T+1. Settlement efficiency at the Intended Settlement Date sits at 94.4% by value.
In IBS terms, these numbers tell a specific story. The settlement service currently tolerates an 8.5% instruction submission failure rate on trade date and a 13.4% matching failure rate. Under T+1, those failures do not carry over to the next day for resolution. They become same-day fails.The impact tolerance, which firms have likely never formally defined for settlement, is about to be tested in live conditions whether they are ready or not.
The US transition is instructive. In January 2024, DTCC reported that 69% of trades were being affirmed by 9PM on trade date - well short of the 90% target set for the May 2024 go-live. The industry closed that gap, but it required significant effort and focus in the months preceding go-live. Europe faces an equivalent challenge, compounded by the ESMA requirement for allocation and confirmation processing to be completed by 23:00CET on trade date by 7 December 2026. That regulatory deadline falls before the first market-wide testing window opens in February 2027.
Firms that do not know their own instruction submission andmatching rates today - by product, by market, by counterparty - do not know where their service breaks under compression. That is the gap analysis. It is the same gap analysis that operational resilience demanded. And it needs to be done now.
Scenario Testing Is Not New Either. Change the Stress Variable.
The Taskforce's testing framework is built around five market-wide windows in 2027 during which all FMIs and Testing Providers are simultaneously available. That infrastructure is valuable. But the Taskforce is explicit that readiness cannot wait for those windows. Much of the preparation - and much of the testing - must happen before firms get near an FMI test environment.
This is where the operational resilience parallel becomes most practically useful. IBS scenario testing does not require an external test environment. It requires a firm to define a plausible stress, trace it throughits service map, and identify where the service fails to remain within impact tolerances.
For T+1, the stress scenarios write themselves. What happens to settlement efficiency when a custodian submits instructions ninety minutes later than required? What is the downstream effect of a confirmation platform experiencing latency at 22:00 CET on trade date? How does the repo book behave when the Settlement Optimisation Gating Event (a new EU construct arriving with the ISO Standards Release in November 2026) interacts with unilateral counterparty choices about its usage?
These are not hypothetical edge cases. They are predictable operational scenarios that firms can and should be running through their service maps before a single FMI test environment is opened. The firms that will perform well in Windows 1 through 5 are the firms that have already stress-tested their own processes internally. The firms that turn up to Window 1 to discover what they do not know will not have time to fix it.
The Two Workstreams That Need to Be in the Same Room
There is a governance problem that most firms have not yet confronted. The teams that built the IBS maps and ran the operational resilience programme are not, in most organisations, the same teams preparing for T+1. Post-trade operations, settlement teams, and T+1 project offices are running their own workstreams. Operational resilience functions are maintaining their frameworks and preparing for the next supervisory review cycle.
Nobody has put these teams together and asked the obvious question: does our IBS documentation already contain the service map we need for T+1 readiness?
In many cases, it does. Settlement services, post-trade processing, and custody operations are frequently captured as Important Business Services or as sub-components of broader client-facing services. The dependency maps exist. The third-party registers exist. The scenario testing methodology exists. What is missing is the application of that infrastructure to the T+1 timeline as the stress variable.
Firms that make this connection now will compress their T+1 preparation timeline significantly. Firms that do not will duplicate work tha thas already been done - or worse, build a T+1 testing plan on foundations that their own operational resilience documentation would have told them are inadequate.
How DC is helping clients
DC has deep expertise in post-trade operations, operational resilience, and regulatory transition programmes. We work with brokers, asset managers, custodians and intermediaries across the UK and EU. For T+1, our starting point is not the testing windows. It is the service map.
That means bringing operational resilience and T+1 workstreams together, applying IBS methodology to settlement flows, and building a preparation programme that is grounded in how the service actually operates, not how the process documentation says it should.
In practice, the work covers: applying IBS mapping to the eight trade flow scenarios the Taskforce has identified, benchmarking firm metrics against the industry data now available, identifying where the service breaks under time compression, designing scenario tests that can be run internally before the market-wide windows open, and building the firm-specific testing plan for FMI engagement across bilateral OTC, securities lending, repo,and corporate events where generic guidance is insufficient.
The October 2027 deadline is fixed. The testing windows open in February 2027. The regulatory deadline for allocation and confirmation processing falls in December 2026. For firms that have not yet started, the preparation timeline is already compressed.
The methodology to address it exists. Most firms already paid to build it. The question is whether they will use it.
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