T+1 Settlement Explained: The New Era of Share Trading in Australia 2025

Australia is gearing up for one of its biggest market reforms in decades: the transition to T+1 trade settlement. While the jargon may sound technical, the change is set to impact everyone from seasoned investors to everyday superannuation members. Here’s what the T+1 shift means for you, why it matters, and how it fits into the global landscape in 2025.

Understanding T+1, T+2, and T+3: What’s Changing?

In the world of share trading, T+1 refers to a settlement cycle where trades are finalised one business day after the transaction date (T). Historically, Australia operated on a T+3 system, moving to T+2 in 2016. Now, with global markets like the US and Canada adopting T+1 in 2024, Australia is preparing to follow suit in 2025. This reduces the time between buying or selling a share and when the cash and securities actually change hands.

• T+3: Settlement occurs three business days after the trade.
• T+2: Settlement occurs two business days after the trade. (Current as of early 2025)
• T+1: Settlement occurs the next business day after the trade. (Proposed for late 2025 in Australia)

This shift is more than a technicality—it’s about risk, efficiency, and keeping Australia competitive on the global stage.

Why Australia Is Moving to T+1 in 2025

The push for a faster settlement cycle is driven by several factors:

• Reduced Risk: The shorter the settlement period, the less time there is for a counterparty to default. This lowers systemic risk for brokers, clearing houses, and investors.
• Global Alignment: With major markets like the US, Canada, and India moving to T+1, Australia must adapt to remain attractive to foreign investors and avoid operational mismatches.
• Technological Advances: Improved digital infrastructure and real-time payments through the New Payments Platform (NPP) have made faster settlement practical in 2025.
• Market Efficiency: Faster settlement improves liquidity, reduces capital requirements for brokers, and gives investors quicker access to their funds.

According to the ASX’s 2025 consultation paper, market participants broadly support the shift, though it will require significant IT upgrades and process changes across the industry.

What T+1 Means for Australian Investors and Brokers

The transition to T+1 will have practical effects across the board:

• Faster Access to Funds: Investors who sell shares will receive their cash the next business day, improving cash flow and flexibility.
• Tighter Settlement Windows: Buyers must ensure funds are available sooner, as there will be less time to arrange payment after a trade.
• Operational Readiness: Brokers, custodians, and fund managers need to overhaul settlement processes, upgrade back-office systems, and retrain staff to meet the new deadlines.
• Corporate Actions and Dividends: The record date for entitlements may move closer to trading dates, impacting how and when investors qualify for dividends or rights issues.

For example, if you sell BHP shares on a Monday, settlement will now occur on Tuesday (rather than Wednesday under T+2). Missing the new, shorter payment window could mean failed trades and penalties.

Challenges and Opportunities: How the Market Is Preparing

While the benefits are clear, the transition isn’t without hurdles. Industry players are investing heavily in automation and real-time reconciliation to meet the tighter deadlines. Super funds and ETF issuers must coordinate with offshore markets still on T+2 or T+3, creating short-term operational headaches.

On the upside, the ASX expects the move will boost Australia’s reputation as a world-class, resilient market. Faster settlement may also help reduce fraud and operational errors, giving everyday investors greater confidence in the system.

Globally, T+1 is seen as a stepping stone towards even faster (potentially real-time) settlement cycles, though most experts agree that T+0 is still several years away.

What’s Next? Timeline and Key Dates

The ASX and industry bodies are targeting Q4 2025 for the official switch to T+1, pending final regulatory approval and readiness checks. Market participants are urged to review their settlement processes now, with the ASX providing regular updates and testing windows throughout the year.

Conclusion: Staying Ahead of the Curve

Australia’s move to T+1 settlement in 2025 is more than just a back-office upgrade—it’s a strategic shift to keep our markets agile, secure, and globally relevant. Whether you’re an active trader, a fund manager, or a passive investor, understanding the implications of T+1 will help you avoid costly missteps and seize new opportunities in a faster-paced market.