SIFMA Reports Successful Transition to T+1 Settlement

In an "After Action" report, SIFMA lauded the successful transition of the US securities market to a T+1 settlement cycle as of May 28, 2024. (See previous coverage.)

The report outlined the benefits of the transition, including reduced settlement risks and increased capital efficiency, and detailed the operational challenges firms faced, particularly in areas like securities lending, foreign exchange, and Exchange Traded Funds. 

SIFMA highlighted that:

• Firms across the securities market successfully reduced settlement risks and made more efficient use of capital due to the accelerated T+1 settlement cycle.
• Industry-wide workshops helped firms operationalize the shortened settlement cycle, with special focus on trade processing, asset servicing and liquidity management.
• Industry participants reported higher affirmation rates, with nearly 95 percent of trades affirmed by the 9:00 p.m. ET cutoff on trade date, significantly improving from the T+2 environment.
• Global coordination with financial markets outside the US was critical, with countries such as Canada, Argentina and Mexico aligning their settlement cycles to match the US transition to T+1.

SIFMA emphasized that the transition showcased the industry's capacity for collaboration and operational resilience. SIFMA also advised against an immediate shift to T+0, citing the need for a comprehensive risk assessment before pursuing further action.