The move to accelerated settlement of T+1 trading day is effective in T-minus 90 days. SIFMA has been leading a working group of over 900 members, including buy and sell side firms, as well as smaller subgroups, in making the substantive preparations necessary to shorten the settlement cycle.
“The move to T+1 is right around the corner, and firms are diligently working towards being ready for the transition this spring,” said Tom Price, managing director and head of technology, operations, and business continuity at SIFMA. “Although this is a complicated and complex initiative, we believe there are risk reduction and operational benefits for investors and the industry. The work is moving along well and there is a high degree of confidence within the industry that we will all move to T+1 settlement on time.”
As part of ongoing efforts to decrease risk in the system, SIFMA, ICI, and DTCC started discussions in 2020 and formally initiated the effort to accelerate the settlement cycle to T+1 in early 2021. In February 2022, SIFMA welcomed the SEC’s leadership in supporting the acceleration of the settlement cycle to T+1 via its proposal, which provided regulatory certainty to market participants.
SIFMA, ICI, and DTCC partnered to lead the effort to shorten the U.S. securities settlement cycle to T+2 in 2017, which required significant coordination across the industry and spanned multiple operations, functions, and regulations. Similarly, moving to T+1 is a significant undertaking, and the organizations have partnered with relevant stakeholders to achieve the many benefits of accelerating settlement to T+1.
With 90 days left, time is of the essence and firms need to be very aware of what steps are left for them to complete ahead of the transition dates: May 27th in Canada and May 28th in the U.S.
SIFMA’s T+1 Playbook is designed to assist firms in their transition to T+1 settlement. This guide outlines a detailed approach to identifying the impacts, implementation activities, implementation timelines, dependencies, and risk impacts, that market participants should consider in order to prepare for the impending transition to a shortened settlement cycle. The Playbook consists of fourteen sections. The first two sections provide overviews of the previous T+2 settlement cycle initiative and the approach taken for the Playbook. The next sections of the Playbook describe Trade Processing, Asset Servicing, Documentation, Securities Lending, Prime Brokerage, and Funding and Liquidity Considerations. The remaining sections describe considerations for Regulatory Changes, Additional Considerations (i.e., Global Considerations, Primary Offerings, Buy-Side Considerations, etc.), Industry Testing and Migration Plans, and associated resources for market participants to prepare for the transition to T+1.
SIFMA is also offering a T+1 training video, A Journey to an Accelerated Settlement Cycle. This video walks through what firms should be doing to prepare for the transition, breaks down the sections within the T+1 Playbook, outlining a detailed approach to identifying the potential impacts, implementation activities, implementation timelines, dependencies, and risk impacts that must be considered. Every firm has a different infrastructure, different businesses, clients, as well as operational processes and geographies which all need to be taken into consideration. The expert speakers help viewers understand how to apply the Playbook, including its timelines and milestones, to each firm’s unique scenario as they progress in transitioning to T+1.
Source: SIFMA
