Investment Operations


T+1 Settlement DTCC

The Securities Industry and Financial Markets Association (SIFMA), the Investment Company Institute (ICI), and The Depository Trust & Clearing Corporation (DTCC) today published The T+1 Securities Settlement Industry Implementation Playbook.

The Playbook outlines a detailed approach to identifying the implementation activities, timelines, dependencies, and risk impacts that market participants should consider to prepare for the transition from the current trade date plus 2 days (T+2) settlement cycle to a trade date plus one day (T+1) settlement cycle. Deloitte & Touche LLP was engaged by SIFMA and ICI to assist in the drafting of this Playbook.

“As part of ongoing efforts to decrease risk in the system, SIFMA, ICI, and DTCC started discussions in 2020 and formally initiated the effort to accelerate the settlement cycle to T+1 in early 2021,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO. “This February, we welcomed the SEC’s leadership in supporting the acceleration of the settlement cycle to T+1 via its proposal, which provides regulatory certainty to market participants,” Bentsen said, noting that the new Playbook offers all impacted market participants a guide to follow as they develop their implementation plans for moving to T+1 settlement in 2024.

According to the groups, the Playbook was developed as a guide for market participants to identify areas impacted by shortening the settlement cycle and considerations that should be addressed. Every firm has different infrastructure, businesses, and clients, as well as operational processes and geographies that need to be taken into account. They stress that, because the SEC’s proposal to shorten the settlement cycle is not yet final, the Playbook serves as a guide to assist with the many complex steps involved in the move to T+1. The Playbook assumes a third quarter 2024 transition date to a T+1 settlement cycle, subject to final regulatory approval, and it may be updated at a later time should regulators select a different transition date.

Analysts say this is a complex ecosystem that requires full industry participation with the support of regulators, working together to make an efficient, effective and risk-free transition to a T+1 settlement cycle.

According to Eric Pan, president and CEO of ICI, moving to T+1 will provide increased efficiencies for both investors and market participants and reduce settlement risk. “The Playbook released today will be a helpful roadmap for our industry, building on the success of the move to T+2,” Pan said. “I am confident that the Commission will finalize a rule that works for all market participants and best serves all investors.”

The Playbook consists of 14 sections. Two sections provide overviews of the previous move to a T+2 settlement cycle and the approach for the latest Playbook. Eight sections explore specific areas of the trade lifecycle including Trade Processing, Asset Servicing, Documentation, Securities Lending, Prime Brokerage, and Funding and Liquidity Considerations. The remaining sections outline matters related to Regulatory Changes, Global Impacts, Primary Offerings, Buy-Side Considerations, Industry Testing and Migration Plans, as well as the associated resources needed for market participants to prepare for the transition to T+1.

“The Playbook provides a robust strategy and plan for market participants to follow to prepare for the move to T+1,” said Michael Bodson, president and CEO at DTCC. “The Playbook reflects the experiences and lessons learned during the seamless transition from T+3 to T+2 in 2017, and we are confident it provides a clear and defined roadmap to further accelerate the settlement cycle in the most efficient manner possible while mitigating risk,” said Bodson.

SIFMA, ICI, and DTCC partnered to lead the effort to shorten the U.S. securities settlement cycle to T+2 in 2017, which industry observers say required significant coordination across the industry and spanned multiple operations, functions, and regulations. Similarly, moving to T+1 is a significant undertaking, and the organizations will partner with relevant stakeholders to achieve the many benefits of accelerating settlement to T+1.

“Moving to T+1 settlement is a transformational change for the securities industry,” said Bob Walley, principal, Deloitte & Touche LLP, who worked with SIFMA, ICI and DTCC to assist in drafting the Playbook. “The Playbook provides industry participants with an extensive document to help them understand the impacts of T+1 on their organization and to mobilize to prepare for this historic transition, which is designed to help reduce risk and modernize the settlement ecosystem for the industry,” said Walley.