18 August 2017
visit www.avoka.com

DTCC throws weight behind US move to T+2

23 April 2014  |  6002 views  |  0 DTCC logo web screen shots

The Depository Trust and Clearing Corporation (DTCC) is stepping up its efforts to shift the US capital markets industry to a T+2 settlement life-cycle.

Currently, the US securities industry completes settlement for trades in equities, corporate and municipal bonds and unit investment trust trades on the third day after a trade is executed (T+3).

European markets are moving to T+2 for these securities, and much of Asia is already on a T+2 settlement cycle.

As long ago as 2001 the US industry was examining a move to a T+1 settlement cycle as a way of reducing credit and liquidity risks. The plans were ditched but momentum behind a shortened cycle picked up again in the wake of the 2008 economic crisis.

In 2012 the DTCC and Securities Industry and Financial Markets Association (Sifma) called in Boston Consulting Group to examine the business case for a change. The management consultancy concluded that same day settlement (T+0) is not feasible but that moving to T+1 or T+2 could prove worthwhile returns on their investment.

This year Sifma, the Investment Company Institute, the Association of Global Custodians (AGC) and the Association of Institutional Investors all voiced support for the T+2 option, which is considerably cheaper than T+1.

The DTCC has now definitively thrown its weight behind the plan, arguing that a shortened settlement cycle will mitigate risk for all industry participants - including the individual investor.

Michael Bodson, president and CEO, DTCC, says: "As the industry is focused on mitigating operational and systemic risk and protecting the integrity of the US financial system, DTCC supports this critical step that will create greater certainty, safety and soundness in the capital markets."

Patrick Kirby, COO, corporate and investment bank operations, JP Morgan adds: "Both institutional and retail investors who trade with and through us benefit from the reduction in settlement time. This is a very significant step in making the industry safer and more reliable."

The next stage of the process will see the creation of a steering committee and working parties as the approach and timeline for implementation are hammered out.
KeywordsDEPOSITORIES

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Sifma calls for US market move to T+2

Sifma calls for US market move to T+2

17 April 2014  |  7044 views  |  0 comments | 8 tweets | 3 linkedin
DTCC warns demand for collateral set to overwhelm system infrastructures

DTCC warns demand for collateral set to overwhelm system infrastructures

22 January 2014  |  6264 views  |  0 comments | 5 tweets | 6 linkedin
UK and Ireland to move to T+2 settlement

UK and Ireland to move to T+2 settlement

02 December 2013  |  7952 views  |  0 comments | 4 tweets | 10 linkedin
Euroclear CSDs to move to T+2 in 2014

Euroclear CSDs to move to T+2 in 2014

24 July 2013  |  4670 views  |  0 comments | 1 tweets
US to explore shortened trade settlement cycle

US to explore shortened trade settlement cycle

23 May 2012  |  8328 views  |  0 comments | 1 tweets
DTCC creates new chief data officer role

DTCC creates new chief data officer role

02 February 2011  |  10313 views  |  0 comments
US regulator reignites T+1 debate

US regulator reignites T+1 debate

15 March 2004  |  6227 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.niceactimize.comvisit www.worldpaymentsreport.comvisit www.dorsum.eu

Top topics

Most viewed Most shared
Monzo appoints Curve co-founder Foster-Carter COOMonzo appoints Curve co-founder Foster-Car...
8653 views comments | 1 tweets | 3 linkedin
Norwegian banks and startups form fintech clusterNorwegian banks and startups form fintech...
7041 views comments | 18 tweets | 22 linkedin
Mobile contactless spending accelerating in UKMobile contactless spending accelerating i...
6603 views comments | 20 tweets | 22 linkedin
hands typing furiouslyWhy Blockchain Might Not Be The Future For...
5829 views 1 | 5 tweets | 3 linkedin