DTCC’s John Abel, Executive Director, Product Management, Equity Clearance and Settlement Services, recently published an essay, “Advancing the settlement model of the US securities markets” in the Journal of Securities Operations & Custody, a highly regarded quarterly journal from UK-based Henry Stewart Publications.
Related: Exploring the Industry Impact of T+1
In the article, Abel effectively lays out the argument for why the industry must work together and galvanize around efforts to move the securities settlement cycle to T+1, reducing costs and mitigating risk for industry participants.
“With today’s interconnected markets, businesses processes and legacy rules, the necessary operational and business changes must be accepted by all industry participants and regulators,” Abel writes.
The record-breaking market volatility in 2020 has certainly been an impetus to a shortened settlement cycle, but the article also provides the historical context for the move from T+5 to T+3 in 1995, and then T+3 to T+2 in 2017, including the adoption of new, efficient processes. Abel also describes DTCC’s critical role over the past 50 years of supporting the industry and protecting the US capital markets as a central counterparty, through multilateral netting and end-of-day settlement.
“The industry’s primary goal must be to create efficiencies without introducing additional risk to markets,” Abel writes. “DTCC is actively working with its industry partners towards a path to accelerated settlement of T+1 and beyond by taking a careful, methodical approach to examine all issues and potential impacts for the entire US equities market.”
A PDF of Abel’s article from Journal of Securities Operations & Custody Volume 14 Number 2 is available here.