DTCC Connection

Aug 23, 2016 • DTCC Connection

DTCC Polls Industry on Settling Trades T+0

By Mike Scotti

DTCC Polls Industry on Settling Trades T0A recent Depository Trust & Clearing Corporation (DTCC) poll reveals that two-thirds of respondents either don’t believe that same-day settlement (T+0) is possible today for U.S. securities or are “unsure” it can be done in the current post-trade environment.

According to the results of a recent DTCC poll on Twitter, respondents are evenly divided on the three answers to this question: “Is the same-day settlement of securities trades in U.S. markets possible today?”

The poll shows that 34% believe same-day settlement is possible today, while 34% say T+0 can’t be done. Another 32% is unsure. The poll garnered 157 responses and concluded August 8.

The correct answer is that DTCC can settle securities the same day, although clients rarely request T+0.

RELATED: How Same Day Settlement Currently Works through NSCC

DTCC can settle trades same-day right now, according to Tom Sakaris, Managing Director and General Manager of Equity Clearing Services at DTCC. But there isn’t a high demand for T+0, he said – at least not right now.

Of the roughly 100 million transactions that DTCC processes each day, less than 1% of the trades settle T+0, based on customer demand. Sakaris said.

“Depending upon who is asked, I’m not surprised at the uncertain and mixed results of the poll,” Sakaris said. “If you’re asking our operations clients, who deal with us every day, I’m sure they know. But if others in their organization are asked, they probably don’t.”

Because the Twitter poll is anonymous, it is impossible to know what role respondents have in the post-trade process – whether they work at brokerage firms, banks, money managers, technology firms or have a regulatory function.

Currently, if DTCC receives a trade prior to 11:30 a.m., that trade can settle same day in its Continuous Net Settlement system, said Sakaris, adding that DTCC is currently reviewing how it can extend the deadline for the same-day settling of trades. And in fact, trades received after 11:30 a.m. can still settle bi-laterally between buyer and seller through other DTCC services, he said.

He pointed out that DTCC is committed to the industry initiative to move to T+2, from the current T+3. That switch is slated to take effect Sept. 5, 2017. But clients do have options, he said.

“T+2 is an important initiative in the industry, and we’re heavily involved and committed,” Sakaris said. “But if a client comes to us and says they need same-day settlement, it can be done.”

To read more about accelerated settlement, click here.

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