A major international banking consortium has cautioned regulators and market participants in Asia against accelerating trade settlement cycles to T+0, citing heightened operational and systemic risks. The group highlighted that over 60% of current transactions in the region still rely on T+2 settlement, and abrupt changes could strain clearing systems.
- Over 60% of trades in Asia still use T+2 settlement as of Q3 2025
- Only 22% of transactions are settled on T+1 basis in the region
- Estimated $3.2 billion required for infrastructure upgrades to enable T+0
- South Korea saw an 18% rise in settlement failures in 2024 due to system strain
- Pilot programs for T+0 expected in Singapore and Hong Kong by early 2026
- Banking coalition warns of cascading risks during market volatility
Senior executives from a multinational banking coalition have issued a formal advisory urging caution in moving toward real-time settlement (T+0) across Asian financial markets. The group, representing institutions with operations in Japan, South Korea, Singapore, and Hong Kong, warned that widespread adoption of same-day settlement without parallel upgrades to infrastructure could compromise market stability. They pointed to the current average settlement cycle of T+2 across the region, with only 22% of trades already processed in T+1 frameworks as of Q3 2025. The advisory emphasized that transitioning to T+0 would require substantial investments in technology, regulatory alignment, and cross-border coordination. It noted that in Japan’s equity market, where settlement timelines are already among the shortest in the region, a premature shift could lead to settlement failures during high-volume events such as quarterly earnings releases. In South Korea, where settlement failures rose by 18% in 2024 due to infrastructure bottlenecks, the risks are particularly acute. Market participants including asset managers and clearing houses are now reassessing implementation roadmaps. The banking group estimated that full T+0 adoption across major Asian exchanges would require at least $3.2 billion in infrastructure upgrades over the next three years. Regulatory bodies in Singapore and Hong Kong have signaled they will maintain phased rollout timelines, with pilot programs expected to begin in early 2026. The shift to faster settlements has been driven by investor demand for reduced counterparty risk and improved capital efficiency. However, the coalition cautioned that rushing the transition could increase liquidity stress during periods of market volatility, potentially triggering cascading failures in interconnected markets.