SIFMA, ICI and DTCC Outline Next Steps to Shorten U.S. Settlement Cycle
Commentary by Steven Lofchie
SIFMA, the Investment Company Institute ("ICI") and DTCC outlined their planned collaborative effort to accelerate the U.S. securities settlement cycle from T+2 to T+1. The organizations intend to work closely with their members and other stakeholders to (i) lay out the steps necessary for shortening the cycle in relation to secondary market transactions, (ii) identify matters of priority and (iii) conduct due diligence.
The organizations identified a number of issues remaining before recommending an implementation date for T+1. They include: considering and mitigating risk; "analyzing and improving current business and operational processes"; reducing potential disruptions; and conducting a comprehensive cost-benefit analysis.
Following the completion of their analysis - anticipated by the end of Q3 2021 - the organizations will establish a concrete timeframe for moving towards T+1. Additionally, the organizations emphasized that regulatory bodies, including the SEC, must be engaged with the effort.
Commentary
There are some obvious benefits to T+1, but there are also obvious operational challenges. In addition, it is prudent to do the cost-benefit analysis before committing to going ahead with the project.