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T+1 Settlement Cycles: New Requirements and Best Practices

Written by Parthiv Patel | May 2, 2023 4:00:00 AM

With the US poised to shorten Settlement Cycles to T+1, and other markets already having made the change or planning to, investment managers may be wondering how to respond. The move is anticipated to provide benefits like overall risk mitigations, capital efficiency gains and reduction or margin requirements, but managers must make some adjustments to comply with the T+1 change.

The T+1 Settlement change will impact any party transacting in US equities, fixed income, ETFs/ETNs, ADRs/MLPs, Sec lending, repos, and Free of Payment Receipts and Deliveries. These instruments are intended to settle in DTC. Firms must consider the steps they need to take to ensure readiness due to the shortening of the settlement cycle. To meet new timing requirements, firms may want to explore a wider adoption of straight-through processing for trade confirmation/affirmation and allocation delivery on T. Any corrections or changes to trade allocations must be communicated to appropriate stakeholders in real-time. Utilizing SWIFT and other structured methods of trade communication would streamline that process more efficiently.

SS&C can help you prepare for the coming T+1 changes. SS&C Middle Office currently affirms 99% of US trades on T, and we have the ability to automate all of a client’s manual trade delivery instructions to various market participants. Our 24-hour service team ensures foreign clients investing in the US market have local support. To learn more about how SS&C can help you conform to the T+1 settlement cycle, download our "T+1 Settlement FAQ" guide.