The Bank of England’s Securities Lending Committee used its September meeting to take stock of the move to T+1 settlement, due in October 2027. Industry participants are broadly on track, the minutes record, but readiness differs significantly between firms, and the operational problems are concentrated where funding markets feel them first: securities lending recalls, collateral sourcing, funding, settlement timing, partial settlements and agent lender capability. The committee’s tax and regulations group added that holding period rules and record date requirements across national tax regimes are already creating operational challenges that faster settlement could amplify.
The market discussion pointed the same way, toward collateral. Members noted increased use of central counterparties, collateral efficiency mechanisms and smart collateral structures, and a growing role for tokenisation and digital collateral in financing markets, while recording that practical use cases remain the critical challenge for digital securities and collateral mobility.
One legal item carries direct rates relevance. The group discussed a case involving the potential recharacterisation of a securities financing transaction as a secured loan, whose outcome, the minutes say, could have significant implications for repos, securities lending and contractual certainty. In a market where gilt repo is the marginal sterling funding channel, the legal form of the transaction is not a technicality, and the committee has put the case on the record a year before T+1 forces firms to rebuild the workflows around it.