DTCC issued the following statement:
"With the U.S. transition to a T+1 settlement cycle less than three months away, market participants must accelerate their preparations with a focus on enhancing operational efficiencies, including the achievement of same-day affirmation.
When the SEC adopted final T+1 rules, the agency instituted new requirements around same-day affirmation practices for both broker-dealers and certain institutional investors to help ensure timely settlement in a T+1 environment. Importantly, the requirement for broker-dealers is that they take certain actions so that 100% of all trades are affirmed as soon as technologically practicable and no later than the end of trade date, as reinforced by FINRA in a recent regulatory notice.
In support of T+1 preparedness, in January 2024, DTCC published an Affirmation Report which recommends that, for the purposes of the relevant cut off times for trade submission to DTC, the industry affirm at least 90% of all trades by 9:00 PM on trade date. This recommendation derives from analysis we conducted based on DTC-submitted trades currently affirmed on T+1 that settle under the current T+2 timeline.
Our analysis shows that in December 2023, as reported in DTCC’s Affirmation Report, 69% of transactions were affirmed by 9:00 PM on trade date. In January, this number increased to 73%. When considering specific market segments as of the end of January 2024,
- Prime Broker Affirmation Rate: 81%
- Investment Manager Auto Affirmation (central match) Rate: 92%
- Custodian or Investment Manager (self) Affirmation Rate: 51%
To ensure preparedness and improve affirmation rates, we highly recommend market participants leverage automated central trade matching solutions with workflows that automatically trigger trade affirmation and the delivery of DTC-eligible securities directly to DTC for settlement when a trade match between an investment manager and executing broker is achieved. At the same time, firms should ensure their buy-side clients are aware of their responsibilities around same-day affirmation. By automating post-trade processes, increasing communication with counterparties and adopting best practices, industry participants will be better placed to achieve T+1, maintain existing market efficiencies and contribute to a safer, more efficient marketplace.”
About DTCC
With 50 years of experience, DTCC is the premier 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 and bringing increased security, enhanced resilience and soundness to financial markets. In 2022, DTCC’s subsidiaries processed securities transactions valued at U.S. $2.5 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $72 trillion. DTCC’s Global Trade Repository service, through locally registered, licensed, or approved trade repositories, processes more than 17.5 billion messages annually. To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, X, YouTube, Facebook, and Instagram.