"Quotes from The Dais"
The day’s event on T+2 testing and preparedness featured three panels that included senior thought leaders from the industry. Below are some remarks “from the dais” at the forum.
“In terms of the scope of changes, on the surface, it looks very simple. But as you start peeling back the onion and go deeper into the impact analysis of the whole ecosystem, there’s a lot to validate before we can begin the changes and the testing. Just like at the industry level, at [our firm] we also have a T+2 steering committee and 20 separate working groups, to look at everything from technology to documentation to business process.”
“We’ve been on this journey for some time internally. We began with an impact assessment back in the beginning of 2015. As an international [firm], we’ve been exposed to this shortened settlement cycle through our businesses in the European market. However, we’ve discovered the U.S. has been quite different, especially from the standpoint of the institutional broker-dealer. There are different systems, different rules, different platforms, and different interdependencies. We’ve been doing front-to-back assessments to determine impact.”
“Whether they participate in the industry testing or not, the vendors all have an obligation to attest with their clients and their ability to absorb the changes. We’re not physically requiring someone to sign a piece of paper, but to at least attest to their readiness.”
“Everyone was in agreement that the industry needed adequate time to test, but if we occupied the DTCC test environment solely with T+2 testing, firms would still need a place to test their business-as-usual T+3 processes. To meet that challenge, DTCC is establishing a new test environment, the PSE A, which will allow firms to continue to test and produce output consistent with a three-day settlement cycle. Our regular test environment, PSE U, will then be converted to accommodate the T+2 testing. This will reduce the amount of connectivity we need to establish for firms to test T+2.”
“At DTCC, we are fully prepared to meet the challenge of getting the industry ready for T+2. We have a T+2 dedicated testing team for support, with SMEs to answer any questions.”
“It would be imprudent of anyone not to test. We’re not mandating testing, except for the ETF agents. But this is a big, public effort, and we are going to be on top of who’s testing, in order to determine industry readiness.”
Discussion at The Depository Trust & Clearing Corporation’s (DTCC) T+2 Readiness and Implementation Forum focused on the latest developments in building out a test environment and creating a detailed test plan for the U.S. move from a T+3 to a T+2 settlement cycle, targeted for September 2017.
The T+2 event on October 28 drew about 150 clients. Discussions during the half-day event ranged from how firms are approaching challenges related to industry testing and the details of DTCC’s own test plan, to an update on the role of the Command Center to assess T+2 readiness, to make the ultimate “go” or “no go” decision on implementation on September 5, 2017.
The event featured presentations byT+2 experts from numerous industry organizations including DTCC, the U.S. Securities and Exchange Commission (SEC), SIFMA, and the Investment Company Institute (ICI), as well as from Morgan Stanley, BlackRock, Wells Fargo Advisors, and Deloitte.
The program was sponsored by DTCC’s Settlement and Asset Services Product Management group, which has been steadily driving the firm’s T+2 initiative since the first feasibility studies in 2012.
Collaboration, Cooperation and Compromise
Michael Bodson, DTCC President and CEO, and Murray Pozmanter, DTCC Managing Director, Head of Clearing Agency Services and Global Operations and Client Services, reinforced the importance of industry-wide collaboration in building support for shortening the settlement cycle .
“We’re heading into the homestretch of making T+2 a reality,” Bodson said in his introductory remarks. “The move to T+2 is one of the largest initiatives ever undertaken by the industry, and we are now less than a year away from the implementation date. We are proud of the role we have taken in coordinating this effort. It is a great example of how the industry can unite behind a common goal and collaborate, compromise, and effect positive change for the betterment of the marketplace and the investing public.”
Bodson also said that, due to the high level of industry partnership and cooperation, the initiative is on-track for a successful September 5, 2017 implementation. However, as the industry gets closer to that milestone, there will also be increased talk about shortening the settlement cycle even further to T+1 or T+0. With many of DTCC’s core systems already able to support accelerated settlement faster than T+2, it is a matter of determining the industry’s appetite for pursuing this initiative further.
Pozmanter offered his take on the success of the T+2 effort to date. “Obtaining critical endorsements from regulators and our partnership with regulators have been key in advancing this initiative,” Pozmanter explained. “We’re moving to the next phase of the project--as you’ll hear from all of our panelists today, we’re moving from planning into testing, putting these collaborative ideas into practice.”