Trade Associations Issue T+1 Settlement Transition Playbook
Commentary by Nick Allen
SIFMA and the Investment Company Institute, in consultation with DTCC, outlined a plan of action that helps market participants prepare for the transition to a T+1 settlement cycle.
The publication, titled T+1 Securities Settlement Industry Implementation Playbook, includes:
- detailed industry and market participant timelines designed to guide industry implementation, testing and migration;
- an impact assessment and a suggested implementation approach to make the required changes to transition;
- an industry readiness assessment plan to transition to T+1; and
- considerations for regulatory changes and additional considerations (e.g., global considerations, primary offerings and buy-side considerations).
Additionally, the playbook addresses potential impacts to, among other things, trade processing, asset servicing, securities lending and prime brokerage. The playbook also examines funding and liquidity considerations.
The associations are anticipating that the transition will take effect in the third quarter of 2024, but the actual effective date is still subject to regulatory approval, including final SEC rules concerning the shortening of the securities settlement cycle.
Commentary
The shift to the T+1 settlement cycle continues to gain momentum, not just from U.S. regulators, but also relevant industry and trade groups and non-U.S. regulators. While the timing of such a change remains uncertain, the implications would be wide-reaching, and market participants should begin assessing impact.
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