Reviewing The Playbook: A Detailed Plan for T+1 Implementation

By DTCC Connection

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

The detailed Playbook identifies implementation activities, timelines, dependencies, and risk impacts that market participants should consider to help prepare for the transition a T+1 settlement cycle.

Related: Exploring the Impact of Accelerating Settlement

Industry Collaboration

SIFMA, ICI and DTCC are leading the US T+1 industry initiative, forming both an Industry Steering Committee (ISC) that provides governance and consensus building as well as Industry Working Groups (IWG) to understand the impact and make recommendations on implementation activities. The ISC worked with the IWG to determine the scope, requirements, and changes for the move to T+1 settlement, as published in the December 2021 Accelerating the U.S. Securities Settlement Cycle to T+1 report.

Framework for T+1

This Playbook is intended to serve as a framework and guide; while some sections may not pertain to each organization, they should provide users with a resource to assist with its T+1 implementation plans. These recommendations are dependent upon final rule language, decisions, and outcomes based on SEC approval. This Playbook will be updated to reflect any changes in the final rule.

Playbook Breakdown

The Playbook consists of 14 different sections, which can be summarized in the following three areas:

  • The first two sections provide overviews of the previous move to a T+2 settlement cycle and the approach for the latest Playbook.

What’s Inside?

The Playbook captures and organizes the various considerations, requirements, and activities for a T+1 implementation, including:

  • A T+1 industry timeline with interim milestones and dependencies designed to guide industry action, market participant implementation, testing, and migration

Why T+1?

Stresses on the U.S. markets, exacerbated by the pandemic and into early 2022, refocused attention on the settlement cycle for securities, including the risks associated in the present-day T+2 settlement cycle. The primary benefits of moving to a T+1 settlement cycle include:

  • The reduction of risk, particularly during periods of high volume and volatility, liquidity requirements and long-term costs.

Next Steps

At the writing of the Playbook, the U.S. Securities and Exchange Commission (SEC) rule proposal and the actual implementation date in 2024 is still pending. However, with industry activity around the move to T+1 quickly ramping up, firms should read the Playbook and begin to develop their own comprehensive internal implementation plans.

Further documents will be issued from DTCC in the coming days, including a document on T+1 Functional Changes and a T+1 High-Level Test Approach. A more detailed document with specific test scripts and test scenarios will developed by the Industry Testing Sub-Working Group and is anticipated to be distributed by year-end 2022.

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