The move to T+1 is approaching, and firms need to plan, prepare and test. That was the common message from a panel of experts in the latest installment of DTCC’s Accelerating to T+1 Webinar Series. Prior sessions have covered the gamut of trade processing, from timelines to DTCC detailed functional requirements and regulatory issues.
Hosted by David Kirby, DTCC Head of Americas Relationship Management, the latest session focused on how firms should prepare for T+1 testing, with insight from Bob Cavallo, DTCC Director, Clearance & Settlement Product Management, Chuck Billikas, DTCC Executive Director, Global Integration and Eleanor Parker, DTCC Manager, Consulting Services.
Below is a summary of the discussion:
Driving Accelerated Settlement
DTCC has been preparing for a move to T+1 since releasing the 2020 white paper Leading the Industry to Accelerated Settlement, which was followed by executive summary sessions, industry working groups, white papers and client webinars. One of the most recent steps towards an accelerated settlement cycle was the DTCC T+1 Test Approach functional paper that was released in early August, focusing on a high-level testing structure. The paper and latest information on the move to T+1 can be found at UST1.org.
Billikas noted, “We’ve done a lot of work to get where we are today, and we still have more work to do from a DTCC and industry perspective.”
It’s Time to Begin Testing
The Securities and Exchange Commission (SEC) has proposed the switchover to T+1 occur on March 31, 2024. However, given the magnitude of testing, DTCC, along with industry partners SIFMA and ICI, have requested that the SEC shift the implementation date to September 3, 2024, which is the Labor Day holiday.
Until further guidance is received from the SEC, DTCC is moving ahead with plans to meet the proposed March 2024 date.
“The goal is to give firms an appropriate amount of time to test, and we are cautiously optimistic that the SEC will align around the Labor Day 2024 industry proposed transition date,” said Cavallo. “If it turns out to be the September date, DTCC plans to open its DTCC PSE U testing region in the fourth quarter of 2023, but if the March date is ultimately chosen, we will open our testing window for the second quarter of 2023.”
While T+1 testing will not be mandated, DTCC recommends that member firms participate in testing to ensure they are prepared. To help firms with their planning and testing processes, DTCC has set up three interactive testing sessions utilizing the DTCC, SIFMA, and ICI T+1 Industry Working group in November 2022 that will provide a view into DTCC’s plans, key dates and an opportunity to speak with product managers and integration and technology teams.
“The goal of the sessions is help complete a detailed testing document, which we plan on releasing to the industry in the December 2022 or January 2023 timeframe,” said Cavallo.
Parker added, “There is no one-size-fits-all when it comes to testing. Firms should consider the various processes impacted by the T+1 functional changes and determine their scope of testing.”