Securities Finance Industry News | DTCC, ICI and SIFMA publish the T+1 Playbook

The Depository Trust & Clearing Corporation (DTCC) has worked with two industry associations, the Securities Industry and Financial Markets Association (SIFMA) and the Investment Company Institute (ICI), to publish a T+1 Implementation Handbook that will guide the transition to the next one-day securities settlement in the United States.

According to the co-authors, this Playbook was created to help market participants prepare for the many complex steps involved in this transition to accelerated settlement. Subject to final regulatory approval, this paper assumes a likely transition date to a T+1 settlement cycle during the third quarter of 2024. However, the authors will update the transition timeline, should financial authorities decide to a different effective date for the adoption of T+1.

Deloitte and Touche LLP were employed by SIFMA and ICI to assist in the writing of this volume.

The Playbook has 14 sections, eight of which provide recommendations applicable to the T+1 transition through different parts of the transaction lifecycle, including transaction processing, asset management, securities lending, prime brokerage, funding and liquidity management and associated documentation requirements.

Other chapters of the Playbook examine issues related to regulatory changes, buyer-side considerations, industry testing and migration strategy, the global impact of the T+1 transition, and core offerings.

Two sections also seek to extract the lessons the industry learned in managing the transition from the T+3 regulation to the T+2 regulation in 2017.

Reflecting on the release, SIFMA President and CEO Kenneth Bentsen said, “As part of ongoing efforts to reduce risk in the system, SIFMA, ICI and DTCC entered into discussions in 2020 and officially launched the effort to accelerate the settlement cycle to T+1 in early 2021.

“Last February, we commended the leadership of the U.S. Securities and Exchange Commission (SEC) in supporting the acceleration of the settlement cycle to T+1 through its proposal, which provides regulatory certainty for market participants. Today [we offer] all relevant market participants a guide to follow when developing their implementation plan to transition to the T+1 regulation in 2024.”

DTCC’s outgoing President and CEO, Michael Bodson, said, “The Playbook provides a solid strategy and plan for market participants to follow to prepare for the transition to T+1.

“[This] reflects the experiences and lessons learned during the smooth transition from T+3 to T+2 and we believe it provides a clear and defined roadmap to further expedite the settlement cycle in the most efficient way possible while mitigating risk.

ICI’s President and CEO, Eric J Pan, added, “The move to T+1 will provide increased efficiency for both investors and market participants and reduce settlement risk. The Playbook released today will be a useful roadmap for our industry, building on the success of the transition to T+2.

With The retirement of Michael BodsonFrank La Salla will take over as President and CEO of DTCC from the end of the month.

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