DTCC, ICI and SIFMA publish T+1 Playbook 01 August 2022US Reporter: AST
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The Depository Trust & Clearing Corporation (DTCC) has collaborated with two industry associations, The Securities Industry and Financial Markets Association (SIFMA) and the Investment Company Institute (ICI), to publish a T+1 Implementation Playbook that will guide the transition to next-day securities settlement in the US.
According to the joint authors, this Playbook has been created to assist market participants in preparing for the many complex steps involved in this move to accelerated settlement. Subject to final regulatory approval, this document assumes a likely transition date to a T+1 settlement cycle during Q3 2024. However, the authors will update the transition schedule, should the financial authorities decide on a different live date for T+1 enactment.
Deloitte and Touche LLP were employed by SIFMA and ICI to help with the drafting of this volume.
The Playbook has 14 sections, eight of which provide recommendations applicable to T+1 transition across different parts of the trade lifecycle, including trade processing, asset servicing, securities lending, prime brokerage, funding and liquidity management and associated documentation requirements.
Other chapters in the Playbook examine issues relating to regulatory changes, buy-side considerations, industry testing and migration strategy, the global impact of T+1 transition and primary offerings.
Two sections also seek to extract lessons that the industry has learnt in managing the transition from T+3 to T+2 settlement in 2017.
Reflecting on the publication, SIFMA president and CEO Kenneth Bentsen says: “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.
“This February, we welcomed the US Securities and Exchange Commission’s (SEC’s) leadership in supporting the acceleration of the settlement cycle to T+1 via its proposal, which provides regulatory certainty to market participants. Today [we offer] all impacted market participants a guide to follow as they develop their implementation plan for moving to T+1 settlement in 2024.”
DTCC’s outgoing president and CEO Michael Bodson says: “The Playbook provides a robust strategy and plan for market participants to follow to prepare for the move to T+1.
“[This] reflects the experiences and lessons learned during the seamless transition from T+3 to T+2 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.”
ICI president and CEO Eric J Pan adds: “Moving to T+1 will provide increased efficiencies for both investors and market participants and reduce settlement risk. The Playbook released today will be a helpful roadmap for our industry, building on the success of the move to T+2.”
With Michael Bodson's retirement, Frank La Salla will take over as president and CEO of DTCC from later this month.
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