Days after the U.S. transitioned to a shorter securities settlement cycle, industry leaders are declaring the move a success.
“You couldn't have scripted it better because if went off very, very smoothly,” said Thomas Price, managing director of technology, operations and business continuity at the Securities Industry and Financial Markets Association.
He added, “As far as I’m concerned — mission accomplished.”
On May 28, market participants in the U.S. officially began accelerating the settlement cycle to T+1 — settling a trade one business day after it is executed — from T+2, or two business days.
The shift, required by the Securities and Exchange Commission in a February 2023 rule, impacts stock and bond trades and is designed to benefit investors, including fund managers and pension plans, and reduce the credit, market and liquidity risks in securities transactions faced by market participants, according to the SEC.
After months of intense behind the scenes planning and testing spearheaded by SIFMA, the Investment Company Institute and the Depository Trust and Clearing Corp., the results have been encouraging.
“Early indications following T+1 implementation are positive, and we look forward to working closely with firms and key stakeholders in the coming weeks to monitor and address any issues that may arise,” the groups said in a joint statement May 31.
On May 30, 94.7% of trades were affirmed by 9 p.m. EDT on their trade date, according to data posted May 31 by the DTCC, a U.S. clearing and settlement service provider.
Price said he expects the affirmation rate to continue to rise.
SIFMA launched a virtual command center May 24 and held informational calls in which hundreds of market participants from around the world took part, according to Price.
When issues arose between two trading parties, the command center was the place to resolve matters. “We created an inclusive, transparent process where market participants can come to a single location any time of the night and day to address key issues that they were wrestling with,” he said.
To ensure regional consistency, Canada, Mexico and Argentina made the T+1 shift on May 27.
“We achieved victory in this quest for efficiency in the settlement cycle in the U.S.,” he said. “And investors benefit, the markets benefit, and we’re very proud of that.”
