An industry steering committee and an industry working group has been formed by the Depository Trust and Clearing Corporation (DTCC) to facilitate the move to shorten the settlement cycle in the US.
The move from T+3 to T+2 will reduce operational and systemic risk by limiting exposure and creating greater efficiencies in trade processing for trades in equities, corporate and municipal bonds and unit investment trusts.
Aimed to be the ‘voice of the industry’ the steering committee will be responsible for overseeing the US move to T+2, driving deliverables of the industry, providing guidance and support to address technological and process building blocks, and communicating changes to the industry.
The committee will be co-chaired by Kathleen Joaquin, chief industry operations officer at the Investment Company Institute, and Tom Price, marketing director for operations, technology and business continuity planning at Securities Industry & Financial Markets Association, and comprises of senior-level representatives from associations and firms representing stakeholders, including buy-side and sell-side firms.
Under guidance from the committee, the working group is responsible for identifying and executing a tactical plan to implement the business and rule changes required to shorten the US settlement cycle to T+2 in a timeframe that is acceptable for the industry.
Price commented: “Shortening the settlement cycle will foster greater certainty, safety and soundness in the US capital markets by substantially reducing risk across the industry and for the individual investor.”
“The formation of the steering committee and working group is key to ensuring that perspectives from across the industry are heard and taken into consideration as these groups move toward determining the best approach and the implementation timeline for reaching a T+2 cycle.”
Joaquin added: “The voluntary move to a T+2 settlement cycle for securities currently settling at T+3 will result in a meaningful reduction in liquidity and operational risks, will promote better use of capital, and will create significant process efficiencies for market participants – all changes that will benefit investors.”
