As the U.S. moves to T+1 settlement on May 28, 2024, our latest report, Hitting 90% Affirmation by 9:00 PM ET on Trade Date: The Key to T+1 Success, unveils crucial strategies for a seamless transition. Under today’s T+2 timeline, approximately 90% of all trades are affirmed by 11:30 AM ET on T+1, the current affirmation cutoff. Under T+1, to maintain existing levels of settlement efficiency, the industry should affirm at least 90% of all trades by the 9:00 PM ET cutoff on trade date.
Related: Goldman Sachs achieves <99% Same Day Affirmation Leveraging DTCC’s CTM M2i
Download the report to better understand the importance of affirmation, insights on the current state affirmation rates across the industry and specific actions we can all can take now to secure a 90% affirmation rate.
Key takeaways:
- The move to a T+1 settlement cycle may require market participant firms to adapt operations to ensure they have adequate time to allocate, confirm and affirm trades by 9:00 PM ET on trade date (the T+1 DTCC affirmation cutoff).
- Based on trades currently affirmed on T+1 that settle under the current T+2 timeline, DTCC recommends the industry affirm 90% of all trades by 9:00 PM on trade date. Doing so will maintain current levels of market efficiency and lower the chances for a potential increase in trade fails.
- Unfortunately, DTCC data shows that only 69% of all trades were affirmed by 9:00 PM on trade date in December of 2023. To support the move to T+1, the industry must focus on affirming trades earlier.
- Institutional trades settled bilaterally through DTC could achieve higher on-time affirmation rates by:
- Ensuring market participants understand best practices of using a TradeSuite ID omnibus account number.
- Encouraging investment managers to obtain their own TradeSuite ID number.
- Examining the pros and cons of first, having custodian counterparties affirm, second, managing self-affirming or third, leveraging a central matching solution with auto affirmation capabilities such as CTM’s Match to Instruct (M2i) workflow.
If you need help preparing for T+1 or want to better understand your current affirmation rates please contact us directly.
For additional information and resources related to T+1 please visit UST1.org, a centralized source of information about the industry's effort to accelerate the U.S. securities settlement cycle to T+1 in 2024.