The T+2 Industry Steering Committee, a buy-side and sell-side trading industry group, on Monday released what it called an “implementation playbook” to guide the U.S. transition to T+2, or trade plus two days, settlement by Sept. 30, 2017.
The playbook provides “a detailed timeline, milestones and dependencies that impacted market participants should consider” to migrate to a two-day settlement cycle from the current three-day settlement cycle for U.S. equities, corporate and municipal bonds, and unit investment trust trades, said a news release from the committee.
Guidance in the playbook covers issues such as trade processing, asset servicing, documentation, regulatory changes, testing/migration, industry actions and other considerations for achieving a reduced settlement cycle. It also includes implementation timelines for suggested regulatory actions, market participant implementation and industry testing.
Mary Jo White, chairwoman of the Securities and Exchange Commission, asked the committee for a detailed T+2 implementation plan after the Securities Industry and Financial Markets Association and the Investment Company Institute asked the SEC in June for specific regulatory changes to facilitate the move to a shortened settlement cycle. Ms. White in a Sept. 16 letter to the committee said she supported such a move and asked for the playbook.
The playbook was submitted to the SEC on Dec. 18.
Representatives of SIFMA and ICI are members of the committee, as is the Depository Trust & Clearing Corp. Deloitte Advisory assisted in developing the playbook.
The full playbook is on the committee website.
According to the T+2 steering committee’s latest white paper, issued in September, 65% of the market capitalization of the world’s 10 largest exchanges use T+3 now; when the U.S. moves to T+2, only 13% of the market cap of those exchanges will use T+3.
