DTCC’s T+1 IWG begins testing cycle
14 August 2023 US
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DTCC’s T+1 Industry Working Group (IWG) has begun its first T+1 testing cycle.
Test Cycle 1 consists of free-form testing and corporate actions scenario testing, and will continue until 25 August 2023. The second test cycle will take place between 28 August and 8 September.
A total of 21 test cycles are scheduled in the lead up to the T+1 implementation date. The testing environment will continue to be available for three days after 28 May 2024, with minimal testing support during the conversion week.
David Kirby, securities practice head at DTCC Consulting Services, says: "Testing is a key part of any T+1 readiness programme, regardless of where firms sit in the securities lifecycle. Firms with well-developed testing programmes or accelerated settlement are well on their way to a successful implementation."
James Pike, head of business development at Taskize, comments: “These testing cycles will reveal any cracks in preparation work that need to be addressed ahead of May 2024. Take one of the key early-stage components of T+1 prep — comparing settlement details to ensure that they meet the terms of the transaction.
"Changes to trade matching processes, including much tighter deadlines for the receipt of an asset manager's trade instructions, not to mention the resolution of pre-trade problems, are of paramount importance. Pre-matching of trades is one of the biggest obstacles to achieving T+1 settlement. Without this, trades cannot move into the shortened settlement cycle and will likely miss the continuous net settlement process.”
Jesus Benito, head of domestic custody and trade depository at SIX, adds: “The US markets started assessing the movement from T+2 to T+1 two years ago — but now the talking ends and the testing begins.
“Clearly, this transition is not the same as when we moved from T+3 to T+2 as now the time pressure is much greater. However, the upcoming test cycles will be a good indicator of how prepared the industry is ahead of next year. Either way, the industry has plenty of solutions available to get there — and this is the perfect time to begin stress testing.”
Test Cycle 1 consists of free-form testing and corporate actions scenario testing, and will continue until 25 August 2023. The second test cycle will take place between 28 August and 8 September.
A total of 21 test cycles are scheduled in the lead up to the T+1 implementation date. The testing environment will continue to be available for three days after 28 May 2024, with minimal testing support during the conversion week.
David Kirby, securities practice head at DTCC Consulting Services, says: "Testing is a key part of any T+1 readiness programme, regardless of where firms sit in the securities lifecycle. Firms with well-developed testing programmes or accelerated settlement are well on their way to a successful implementation."
James Pike, head of business development at Taskize, comments: “These testing cycles will reveal any cracks in preparation work that need to be addressed ahead of May 2024. Take one of the key early-stage components of T+1 prep — comparing settlement details to ensure that they meet the terms of the transaction.
"Changes to trade matching processes, including much tighter deadlines for the receipt of an asset manager's trade instructions, not to mention the resolution of pre-trade problems, are of paramount importance. Pre-matching of trades is one of the biggest obstacles to achieving T+1 settlement. Without this, trades cannot move into the shortened settlement cycle and will likely miss the continuous net settlement process.”
Jesus Benito, head of domestic custody and trade depository at SIX, adds: “The US markets started assessing the movement from T+2 to T+1 two years ago — but now the talking ends and the testing begins.
“Clearly, this transition is not the same as when we moved from T+3 to T+2 as now the time pressure is much greater. However, the upcoming test cycles will be a good indicator of how prepared the industry is ahead of next year. Either way, the industry has plenty of solutions available to get there — and this is the perfect time to begin stress testing.”
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