Skip to main content

Corporate Actions and the T+2 Initiative
Jon Ciciola, Director, DTCC Settlement & Asset Services

In its recently released whitepaper, “Shortening the Settlement Cycle: The Move to T+2”, the T+2 Industry Steering Committee (T+2 ISC), Industry Working Group (IWG) and sub-working groups (SWGs) identified and assessed the regulatory changes and industry-level requirements to facilitate a move to T+2 for equities, corporate bonds, municipal bonds, unit investment trusts, and financial instruments comprised of these products.

The industry-level requirements are grouped into four areas:

Asset Servicing: Requirements related to asset servicing functions that include ex-date and cover/protect period computations for corporate actions.
Trade Processing: Requirements for trade processing activities, including reference data setup, real time trade matching, straight-through processing and the delivery of physical securities.
Documentation: Requirements related to agreements and procedural documentation.
Regulatory Changes: Regulatory rule changes that will be necessary for migration to T+2.

In a three-part series, DTCC Connection will provide readers with a deeper understanding of the regulatory changes and industry-level requirements identified by the IWG and SWGs. In this installment, Jon Ciciola, Director, DTCC Settlement & Asset Services, shares insight into some of the potential effects of T+2 on asset servicing and corporate actions.

DC: What areas of corporate actions will be impacted by the impending move to T+2? How exactly will they be affected?

JC: There are two corporate action events that will be impacted by shortening the settlement cycle. One relates to time intervals for “Protect Dates” for voluntary events and the other relates to “Ex-Date” trading. Shortening the time intervals for these events align with the overall benefits of achieving settlement certainty, risk mitigation and operational efficiency that T+2 sets out to accomplish.

The Protect Date is widely used for voluntary offers. Its emergence stems from a time when the settlement cycle was longer than T+3, and physical certificates in the marketplace were much more common, leading to processing inefficiencies. The Protect Date essentially allows more time for securities to get into the possession of the intermediaries that handle an investor’s participation in a corporate action.

The Ex-Date is used to allow the trading of a stock with a declared dividend that is due to the seller of the stock, rather than the buyer, when trading is taking place at the time the dividend is set to be distributed. It is a means to direct the dividend payment to the rightful owner without having to claim the payment reactively as securities change hands.

Typically, Protect Dates allow for three days to cover securities that an investor wants to tender without having them in their possession when the offer expires. With a T+2 settlement cycle, the window will obviously be shortened to just two business days. The establishment of a Regular-way Ex-Date, which is the first day a security trades without a dividend, will also be shortened from three to two business days. As part of the process, firms that hold or trade securities that are impacted by these types of corporate action events will need to make changes.

DC: Can you explain the changes that stakeholders will need to make to account for changes to these key triggers?

JC: These changes will be at the processing level and impact operating procedures, job aides and internal training. This is aside from the overall industry-level requirements, identified in the white paper “Shortening the Settlement Cycle: The Move to T+2,” issued by the Industry Steering Committee (ISC), which is driving the T+2 initiative. The paper, which is available at, outlines the technology, process and behavioral changes that affect the various stakeholders in the financial community.

DC: How have clients been involved in this process?

JC: Clients are very much a part of the process. In addition to the T+2 ISC, which is led by SIFMA, ICI and DTCC, the IWG and its five sub-working groups are comprised of over 600 industry subject matter experts. These groups were tasked with identifying the changes needed to move to T+2. With this level of direct client engagement, DTCC expects this process to continue to be highly collaborative.

DC: How is information being shared to ensure firms are aware of key milestones and other important information?

JC: At DTCC, we continue to promote T+2 and the expected changes. Next steps include continued collaboration with regulators, the development of test plans and the development of an industry-wide implementation plan. We are also conducting industry outreach, such as speaking at the SSA Annual Conference, which allows us to share information broadly with important industry stakeholders.

For more information:

4 Things to Know About Shortening the U.S. Settlement Cycle
Shortening the Settlement Cycle: The Move to T+2
Executive summary deck: Shortening the Settlement Cycle: The Move to T+2
Press release: Financial Services Industry Announces Proposed Timeline for T+2 Settlement Cycle in the U.S.