With T+1 in the U.S. on the horizon, firms are increasingly looking to automated solutions like the CTM® workflow, Match to Instruct (M2i), to support their move to accelerated settlement by compressing their current post-trade processes into the span of just one day.
DTCC Connection sat down with Peter van den Noort, DTCC Director, ITP Product Management, and CTM’s M2i Product Lead, to talk more about M2i and how firms can prepare for T+1.
Related: The Impact of Accelerating to T+1 on Institutional Trade Flows
DC: What are some of the issues firms are facing to meet the new T+1 rule by 2024?
PV: Currently, firms are working on a T+2 timeline, meaning they need to finalize all their trades two days after trade date. With the SEC’s accelerated settlement requirements, firms need to streamline and compress their post-trade processes to meet T+1; one day after trade date. A common area with opportunity for improved efficiency is the affirmation process. Many firms complete this manually or with the help of a custodian but could take advantage of automatic affirmation workflows to make this happen faster.
DC: How does M2i automate and streamline post-trade processing and the affirmation process?
PV: CTM’s M2i workflow can automatically trigger trade affirmation and delivery of DTC eligible securities directly to DTC for settlement when a trade match between an investment manager and executing broker occurs. Clients utilizing an M2i workflow achieve the significant benefit of central matching and auto-affirmation compared to local matching and affirmation by the custodian or institution.
DC: Can you elaborate on what that means?
PV: As soon as a trade matches, it is automatically sent into settlement reaching a level of straight-through-processing efficiency to hit that 9:00 PM Trade date cutoff. It is effectively taking the matched transaction in CTM and submitting it as an affirmed confirm into the settlement cycle at the DTC, free of manual touch points.
DC: How can firms learn more about M2i as it relates to T+1?
PV: To help firms prepare, we’re offering a monthly CTM T+1 Readiness Webinar Series with sessions tailored to both buy-side and sell-side CTM clients. To register for upcoming webinars or view past recordings, please log in to the DTCC Learning Center. We use this forum on DTCC Learning to share ITP’s recommended best practices for ALERT, CTM and TradeSuite ID to improve compliance with the SEC’s T+1 rules. Additionally, we cover specific topics like Same-Day Affirmation Rates, Custodian Omnibus Accounts, and offer clients an opportunity to ask questions.
DC: How else can ITP services help firms get ready for the transition to U.S. T+1?
PV: Clients can reach out to [email protected] to request their current affirmation rate and learn more about implementing an M2i workflow. ITP Data Analytics recently implemented Affirmation Reporting, which helps clients to see where they can automate and improve their processes specifically to increase their affirmation rates. The service also delivers metrics on clients’ matching capabilities in CTM.
For buy-side firms, having your Global Custodian maintain your SSIs via ALERT’s Global Custodian Direct workflow, ensures the most accurate instructions are provided to your trade counterparties.
Finally, for clients who might not have the subject matter expertise or the resourcing to conduct a comprehensive impact analysis or execute on all the projects required to be ready for T+1 by May 2024, DTCC Consulting Services can help firms along every step of their T+1 readiness journey from impact analysis to project design and execution all the way through post-implementation remediation.
To see dates and sign up for the CTM T+1 Readiness Webinar, click here, and contact us with any additional questions about T+1.