SSIs, or standard settlement instructions, play a critical role in trade settlement, and this will not change once T+1 is implemented across the North American markets. It is critical that investment managers, brokers, custodians and all other stakeholders communicate SSI changes to each other as soon as possible, and that the parties receiving these notifications make changes as soon as they become effective. This concept seems easy enough, but there is always a stakeholder who forgets to make the change, or that makes it too early. These types of mistakes will be more troublesome after the move to T+1.
Earlier cut-off times mean less time to catch and correct mistakes, even in the US market, where affirmation is in place. If a broker or investment manager does not make the appropriate SSI adjustments ahead of time, and they are waiting until the end of the day to bill or review DTCC confirms, there will be limited time to make the necessary adjustments. Catching an incorrect SSI late in the day might also mean sending a cancel/correct to a custodian past their trade processing cutoff.
One way to avoid cancel/rebooks, and reduce the risk of trade fails is to ensure that SSIs are correct when you confirm a trade. This may seem redundant; however, things do change, and the best way to make sure that all parties are aware of these changes is to always validate that the information is up to date. A number of SS&C clients utilize services such as CTM, where brokers connect their SSIs to the trade confirms via Alert. SS&C has the ability to consume these SSIs back into our system, and validate them to the SSIs that our platform will use to populate the SWIFTs that go out to custodians and other stakeholders. This validation gives extra comfort that the instructions being sent are the latest and greatest, reducing the risk of market failures. However, this check is only foolproof if brokers are publishing their adjustments on time. Timeliness of updates and clear communication from all parties are essential to ensuring that SSIs are correct, and do not cause delays or trade fails in T+1.
To learn more about how SS&C can help you conform to the T+1 settlement cycle, download our "T+1 Settlement FAQ" guide.
