OCC Provides New Guidance on T+1 Settlement
Commentary by Steven Lofchie
In a new Bulletin, which replaced and rescinded previous guidance, the Office of the Comptroller of the Currency ("OCC") advised regulated banks to prepare for the reduction in the settlement cycle for regular way trades.
In Shortening the Standard Settlement Cycle, the OCC highlighted (i) the upcoming compliance deadline of May 28, 2024; (ii) the need for banks to "prepare to meet the applicable time frames ... for banks' investment and trading portfolios and securities settlement and servicing provided to banks’ custody and fiduciary accounts"; and (iii) the need to "assess the broker-dealer's preparedness for the new settlement time frames," for those "banks that offer retail nondeposit investment products through a broker-dealer."
The OCC provided a list of factors that regulated banks should consider when developing their project plans on the "system, process, and technological changes" necessary for compliance and in order to "implement an appropriate risk management system."
Commentary
Although the OCC's laundry list of considerations on system, process, and technological changes needed for the T+1 transition was prepared for national banks, it is useful for firms of all types, including broker-dealers and buy-side firms.