The majority of US securities industry firms are starting to prepare for the move to a T+2 settlement cycle, according to an SS&C survey.
The T+2 preparedness survey, conducted at the International Securities Association for Institutional Trade Communication (ISITC) Annual Industry Forum & Vendor Show in Boston, evaluated attendees’ attitudes towards the change in the settlement cycle.
A majority of respondents said they have started assessments to prepare. While 72 percent said they have started assessment of their technology preparedness, another 12 percent said they would start soon – in the first half of 2016.
A further six percent said they would start in the second half of 2016, and another 6 percent said their timeline is dependent on a review of their technology infrastructure. A final 4 percent said they do not believe they need to assess their technology capabilities.
When asked about their operational preparedness, 66 percent said they have started assessments here. A further 10 percent said they would begin assessment in the first half of this year, and another 10 percent said they would start in the second half.
Again, some 8 percent said their timeline is dependent on reviews of technology infrastructure, while only one respondent did not see a need for assessing internal processes.
Finally, 4 percent said they will wait until 2017 to start assessing operational preparedness, and these were solely buy-side representatives.
Buy-side firms were also found to be the least likely to increase their budget to support T+2 upgrades – 60 percent said they would keep the same budget, compared to just 22 percent of all respondents.
Of all attendees, 48 percent said they have already increased their technology budget, and 30 percent said they intend to.
Finally, attendees were asked whether they believe the US will move to a T+1 settlement cycle within the next decade, if the transition to T+2 goes smoothly. The majority said either yes or maybe – 42 and 36 percent, respectively. While 8 percent said they were unsure, 14 percent voted a decisive ‘no’.
Bob Moitoso, senior vice president and general manager for financial markets at SS&C Technologies, said: "Firms are operating in a dynamic environment that requires agility, efficiency, and reliability. The survey findings show a widespread awareness in the industry regarding the need for adequate preparation time and a commitment to maintaining a robust technology infrastructure."
He added: “We counsel customers to be proactive in their approach despite the long lead time to prepare, and the survey feedback really resonates with that guidance – if you haven’t started, you’re already behind.”
The survey included 50 executives attending the ISITC event in March 2016. Half of the respondents were from buy-side firms, 38 percent were from custodians, and 12 percent were from sell-side organisations.
More than three quarters, 76 percent, were from organisations of more than 500 employees, and 12 percent were from organisations of fewer than 100.
