DTCC issued the following statement:
With just over a month left until the introduction of the T+1 payment cycle in the US, market participants continue to prepare for the May 28, 2024 deadline. As companies consider implementation approaches, many focus on the importance of achieving same-day approval.
Our latest analysis shows that in March 2024, 74.95% of trades were approved by the DTC cutoff time of 9:00 PM ET on the trading day, up from 74.5% in February. Considering specific market segments at the end of March 2024:
- Prime broker affirmation rate:83% (stable from February)
- This rate is expected to increase in April as more prime brokers move to real-time affirmations.
- Investment Manager Auto Affirmation (Center Match) Rate 91% (up 2% from 89% in February)
- In March, DTCC’s Institutional Transaction Processing (ITP) added 30 new investment managers to CTM’s automated confirmation workflow, bringing the current total of investment managers using this feature to 399. 280 of these investment managers are compatible with his CTM Match to Instruct (M2i). Workflow.
- This percentage will continue to increase as investment managers continue to onboard and configure brokers.
- Custodian or investment manager (self) positivity rate: 55% (up from 53% in February)
- DTCC continues to work closely with the custodian community and advocate for increased positivity rates. To improve operational efficiency, custodians are encouraged to encourage clients to obtain their own TradeSuite IDs rather than relying on custodian omnibus accounts.
- More than 1,370 TradeSuite IDs were added in Q1 2024, providing investment managers with greater transparency into positivity rates. Additionally, an investment manager already running on CTM can activate automatic confirmation to enable his M2i. This helps achieve significantly higher positivity rates. We strongly encourage continued cooperation between investment managers and their custodians.
With just over a month left until the T+1 deadline, market participants should accelerate their preparations. Leveraging technology to increase positivity rates reduces the chance of failed transactions and provides the efficiency needed to accelerate settlement schedules. By leveraging automation to optimize payment workflows and directly perform post-trade processing, businesses can more easily achieve T+1 payments.
If a company fails to meet the T+1 deadline, it risks reputational damage and additional costs due to failed trades or settlement of trades with more expensive delivery orders. In addition, companies should heed the risk warning recently issued by the SEC Division of Examination: Shortened Settlement Cycles for Securities Transactions.
Source: DTCC
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