Market resiliency is a top priority for SIFMA and its members. Enhancing our securities settlement process is critical to the continued resiliency of our markets and market operations.
On February 24, 2021, the Depository Trust & Clearing Corporation (DTCC) released a whitepaper, outlining a two-year approach to shortening the settlement cycle for U.S. equities to one business day after the trade is executed (T+1). Similar to 2017, when the industry transitioned to T+2, moving forward on both the integrated settlement model and moving to a T+1 settlement cycle will be a substantial undertaking requiring broad industry actions.
As discussions on the industry’s securities settlement processes continue, including the business and operational impacts on any future changes to shortening settlement times to T+1, SIFMA believes it is essential to ensure that plans allow for a sufficient amount of time to successfully accomplish further changes – particularly in light of other industry operational obligations such as the Consolidated Audit Trail (CAT).
SIFMA, the Investment Company Institute (ICI), and The Depository Trust & Clearing Corporation (DTCC) are collaborating on efforts to accelerate the U.S. securities settlement cycle from T+2 to T+1. Working closely with members and other key stakeholders, the organizations are outlining key steps to shorten the cycle for secondary market transactions, identifying priority issues that need to be addressed and conducting the necessary due diligence and resolution of these critical issues. The groups began to discuss shortening the settlement cycle with members last year and aim to complete an analysis on the next steps to achieving T+1 by the end of Q3 2021. Shortly after that work, the organizations will develop a definitive timeframe for moving to T+1. In addition to their efforts to shorten the settlement time, SIFMA, ICI and DTCC will assess what it may take to further accelerate the settlement cycle beyond T+1 and explore the role that emerging technologies could play.