With an accelerated settlement window comes numerous material changes to the settlement process that pose technological, operational, and legal considerations.
In May 2024, the U.S. (May 28) and Canada (May 27) will once again transition their settlement cycle. After more than 20 years without significant changes, there was a shift from T+3 to T+2 in 2017. Now there will be another shift, this time to T+1.
The move to T+1 is intended to bring down costs, enhance market liquidity, increase market efficiency, and reduce settlement risk for investors and market participants alike. However, with an accelerated settlement window comes numerous material changes to the settlement process that pose technological, operational, and legal considerations.
Securities lending will be impacted, and modifications to processes and technology will be necessary to avoid a potential increase in settlement fails. Firms will have to focus on accelerating several activities—sell communication, recalls, and position sourcing—while also reducing the time allowed to settle transactions.
To assist the industry in making the transition to T+1, KPMG and RMA’s “Securities Finance & T+1” suggests practices, processes, and key areas of focus as next year’s deadline approaches. Informed by KPMG subject matter experts and members of RMA’s Securities Lending Council, the paper can help accelerate the ability of firms to meet an accelerated settlement cycle.
Download the paper here.