The US transition to a T+1 settlement cycle is only two weeks away, and DTCC says that it continues to actively work with the industry and regulators to ensure a seamless transition to a T+1 settlement cycle on May 28th, 2024, with a focus “on increasing operational efficiencies, completing testing and ensuring readiness for the T+1 conversion weekend.”
DTCC analysis shows that “in April 2024, 83.5% of transactions were affirmed by the Depository Trust Company (DTC) cutoff time of 9:00 PM ET on trade date.”
This represents a more than 8-percentage point “increase from March’s 74.95% rate, significant progress as the industry moves closer to implementation. When considering specific market segments as of the end of April 2024:”
Prime Broker Affirmation Rate: 92% (up from 83% in March)
The 9-percentage point jump was driven primarily “by prime brokers continuing to implement real-time affirmation in April.”
Investment Manager Auto Affirmation (central match) Rate: 93% (up from 91% in March)
In April, DTCC’s Institutional Trade Processing (ITP) “added 59 new Investment Managers to the CTM auto affirmation workflow, with 458 firms now leveraging this capability. In addition, 350 of these Investment Managers are now enabled for CTM’s Match to Instruct (M2i) workflow.”
Custodian or Investment Manager (self) Affirmation Rate: 62% (up from 55% in March)
This improvement was driven by “the adoption of TradeSuite IDs by Investment Manager firms.”
To date, 2,140 TradeSuite IDs have “been added this year.”
As we approach T+1, DTCC reminds Investment Managers who will “rely on their custodians to handle their affirmations to instruct those custodians according to their cutoff times so that affirmations are received by DTC’s cutoff of 9pm ET on trade date.”
Pursuant to SEC Exchange Act Rule 15c6-2, broker-dealers must “take actions to ensure 100% of all trades are affirmed as soon as technologically practicable and no later than the end of trade date.”
To maintain current market efficiencies, DTCC recommends “that organizations affirm their transactions by the DTC 9:00pm ET cut-off on trade date.”
Further, DTCC and a diverse cross-section of buy-side, sell-side and custodian clients recently conducted a series of outage scenario exercises, commonly known as tabletops, aimed to assess the impacts of hypothetical outage scenarios in a T+1 settlement environment. For a summary of helpful findings from these tabletops, download the Tabletop Takeaways infographic.
Clients are encouraged to review DTCC’s T+1 Conversion Guide and SIFMA’s T+1 Command Center.
With just a few weeks until the T+1 implementation date, market participants should finalize their preparations, complete end-to-end testing and ensure the completion of operational readiness plans for T+1 weekend. DTCC remains committed to working with individual firms, regulators and key stakeholders towards a smooth, successful transition to T+1 later this month.
With over 50 years of experience, DTCC is the post-trade market infrastructure “for the global financial services industry.”
From 20 locations around the world, DTCC, “through its subsidiaries, automates, centralizes, and standardizes the processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for thousands of broker/dealers, custodian banks and asset managers.”
Industry owned and governed, the firm “innovates purposefully, simplifying the complexities of clearing, settlement, asset servicing, transaction processing, trade reporting and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem.”
In 2023, DTCC’s subsidiaries “processed securities transactions valued at U.S. $3 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $85 trillion.”
DTCC’s Global Trade Repository service, “through locally registered, licensed, or approved trade repositories, processes more than 20 billion messages annually. “
