Back to News

50 Days To T+1 Transition – The Last Mile

This post is based on the T+1 Industry Briefing, held April 8, 2024, and edited for clarity.

The transition to a T+1 settlement cycle has been a multi-year project that eclipses the effort it took to transition the industry to T+2 back in 2017. As of today, April 8th, we have 50 days until May 28th – the industry-led and regulatory-mandated transition date to T+1 in the U.S.

In reality, we have 46 days until Friday, May 24th, which is the beginning of the transition weekend when DTCC will be kicking off their conversion plans. We are joined by ICI, DTCC, and Deloitte: thank you to our industry partners for the guidance and collaboration on this historic journey for the financial services industry.

Getting the U.S. markets to a T+1 settlement cycle has been a goal since the U.S. moved to T+3 from T+5 back in 1995. So, this has truly been a 29-year journey. In 2020, the industry started to explore what was needed to transition to T+1 including the impacts to the markets, participants, and products.

In addition, we are seeing a global trend of accelerating settlement cycles:

  • In January 2023, India moved to T+1 and they have ambitions to shorten their settlement cycle even further.
  • On May 27th, Canada and Mexico will also move to T+1.
  • Two weeks ago, the UK published what is known as the Geffen Report highlighting their intention to transition to T+1 no later than the end of 2027 – with their preference to align with the EU and Switzerland.
  • The EU is expected to publish a report by the end of 2024 outlining the details of their intention to move to T+1.

These moves around the globe are likely one of the biggest infrastructure changes facing our industry since Y2K. Why are we doing this and why is it important?

  • Shortening the time between the trade date and settlement date reduces risk in the system.
  • Investors receive their cash proceeds one day sooner.
  • It reduces the clearing fund requirements by literally billions of dollars.
  • A large-scale project of this type, which impacts every financial institution, also helps drive innovation, automation, and process improvements.

To access industry resources for the transition, visit ust1.org.

For the full briefing discussion, watch the replay on demand. Topics include the rule changes and meeting regulatory requirements, considerations for buy and sell-side firms, allocations – confirmations – affirmations, testing and procedures, international considerations, and more.

—

Tom Price is a managing director and head of technology, operations and business continuity for SIFMA.

Additional Resources