The Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI), and The Depository Trust & Clearing Corporation (DTCC) are collaborating on efforts to accelerate the US securities settlement cycle from T+2 to T+1.
Working closely with their members and other key stakeholders, the organisations are outlining key steps to shorten the cycle for secondary market transactions, identifying priority issues that need to be addressed and conducting the necessary due diligence and resolution of these critical issues. The groups began discussing shortening the settlement cycle with their members last year and aim to complete their analysis on the next steps to achieving T+1 by the end of Q3 2021. Shortly after that work, the organisations will develop a definitive timeframe for moving to T+1. In addition to their efforts to shorten the settlement time, SIFMA, ICI and DTCC will assess what it may take to further accelerate the settlement cycle beyond T+1 and explore the role that emerging technologies could play.
“Accelerating the settlement cycle, as we and our partners ICI and DTCC know from experience, is a complex and significant undertaking,” says SIFMA President and CEO Kenneth E Bentsen, Jr. “A shorter settlement timeframe can benefit investors and market participants by reducing credit, market and liquidity risks and promoting financial stability. Our plan is to fully address the business and operational impacts of the change first, to ensure a smooth transition and avoid any unnecessary market risk.”
“ICI and its members will play an active role in designing the roadmap for shortening the settlement time,” says ICI President and CEO Eric J Pan. “Regulated funds occupy a prominent place at the intersection of trading and settlement as they are the primary source for the daily trading transactions that brokers process. ICI, SIFMA and DTCC led the move to T+2 settlement in 2017, and we look forward to reviving that successful partnership.”
