The Path to T+1
Together with the Securities Industry and Financial Markets Association (SIFMA) and the Depository Trust & Clearing Corporation (DTCC), ICI has outlined a roadmap to shorten the US securities settlement cycle from trade date plus 2 days (T+2) to trade date plus one day (T+1).
“Shifting to T+1 will strengthen the financial system and offers tangible benefits to investors by reducing their risk exposure and enabling them to more quickly leverage investment opportunities.”
ICI President and CEO Eric J. Pan
The effort to shorten the settlement cycle, like the industry move from T+3 to T+2 in 2017, requires collaboration from market participants across the industry. The report targets the first half of 2024 to implement T+1, allowing time for firms to assess the changes they need to undertake, for the industry to conduct comprehensive testing, and for regulators to make the necessary regulatory changes.
The Industry Steering Committee, made up of industry participants (buy-side, sell-side, vendors) led by ICI, SIFMA, and DTCC, recommends that firms begin to work with their counterparties, custodians, vendors, regulators, and clients to better understand internal impacts related to timing requirements and deadlines, system requirements and improvements, and process changes.