The Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI), and the Depository Trust & Clearing Corp (DTCC) have published the T+1 Securities Settlement Industry Implementation Playbook.
The trade groups said it is important to note though that, because the US Securities and Exchange Commission (SEC’s) proposal to shorten the settlement cycle, which was announced in February, is not yet final, the Playbook serves as a guide to assist with the many complex steps involved in the move to T+1.
The Playbook comprises 14 sections with the first two providing recap of the previous move to a trade date plus (T+2) settlement cycle followed by a detailed approach to identifying the implementation activities, timelines and dependencies.
It also highlights the risk impacts that market participants should consider to prepare for the transition to a trade date plus one day (T+1) settlement cycle.
Eight sections look specifically at the trade lifecycle including trade processing, asset servicing, documentation, securities lending, prime brokerage, and funding and liquidity considerations.
The remaining outline matters related to regulatory changes, global impacts, primary offerings, buy side considerations, industry testing and migration Plans, as well as the associated resources needed for market participants to prepare for the transition to T+1.
The Playbook assumes a third quarter 2024 transition date to a T+1 settlement cycle, subject to final regulatory approval, and it may be updated at a later time should regulators select a different transition date.
“The Playbook provides a robust strategy and plan for market participants to follow to prepare for the move to T+1,” stated Michael Bodson, president and CEO at DTCC.
“The Playbook reflects the experiences and lessons learned during the seamless transition from T+3 to T+2 in 2017, and we are confident it provides a clear and defined roadmap to further accelerate the settlement cycle in the most efficient manner possible while mitigating risk. “
SIFMA, ICI, and DTCC partnered to lead the effort to shorten the US securities settlement cycle to T+2 in 2017, which required significant coordination across the industry and spanned multiple operations, functions, and regulations.
Similarly, they said, moving to T+1 is a significant undertaking, and the organizations will partner with relevant stakeholders to achieve the many benefits of accelerating settlement to T+1.
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