On April 22, 2024, DTCC issued the following statement:
The implementation of a T+1 settlement cycle in the U.S. is a little over one month away, and market participants continue to prepare for the May 28, 2024, deadline. As firms consider their implementation approach, many are focusing on the importance of achieving same-day affirmation.
Our latest analysis shows that in March 2024, 74.95% of transactions were affirmed by the DTC cutoff time of 9:00PM ET on trade date, an increase from 74.5% in February. When considering specific market segments as of the end of March 2024:
- Prime Broker Affirmation Rate: 83% (flat from February)
- As more Prime Brokers move to real time affirmation, this rate is expected to increase in April.
- Investment Manager Auto Affirmation (central match) Rate: 91% (up 2% from 89% in February)
- In March, DTCC’s Institutional Trade Processing (ITP) added 30 new Investment Managers to the CTM auto affirmation workflow, bringing the current total of Investment Managers using this capability to 399. 280 of these Investment Managers are enabled for CTM’s Match to Instruct (M2i) workflow.
- As Investment Managers continue to on-board and configure their Brokers, this rate will continue to increase.
- Custodian or Investment Manager (self) Affirmation Rate: 55% (up from 53% in February)
- DTCC continues to work closely with the Custodian community to advocate for improvements in affirmation rates. To increase operational efficiency, Custodians are advised to encourage their clients to get their own TradeSuite IDs rather than relying on their Custodian’s omnibus account.
- Over 1,370 TradeSuite IDs were added in Q1 2024, providing Investment Managers with greater transparency into affirmation rates. Additionally, an Investment Manager that is already live on CTM can activate Auto Affirmation and enable M2i. This helps achieve significantly higher affirmation rates. We strongly encourage continued collaboration between Investment Managers and their Custodians.
With a little over one month left until the T+1 deadline, market participants must accelerate their preparations and readiness. Improvement in affirmation rates – aided by technology – can reduce the likelihood of trade failure and provide needed efficiency to achieve accelerated settlement timelines.Leveraging automation to optimize settlement workflows and implementing straight through post trade processing better positions firms to achieve T+1 settlement.
Should firms be unable to make T+1 deadlines, they run the risk of reputational damage and additional costs due to trade fails or settling trades via more costly delivery orders. Further, firms should note the recent SEC Division of Examination’s Risk Alert, “Shortening the Securities Transaction Settlement Cycle.”
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ABOUT DTCC
With over 50 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From 20 locations around the world, DTCC, through its subsidiaries, automates, centralizes, and standardizes the processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for thousands of broker/dealers, custodian banks and asset managers. Industry owned and governed, the firm innovates purposefully, simplifying the complexities of clearing, settlement, asset servicing, transaction processing, trade reporting and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem. In 2023, DTCC’s subsidiaries processed securities transactions valued at U.S. $3 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $85 trillion. DTCC’s Global Trade Repository service, through locally registered, licensed, or approved trade repositories, processes more than 20 billion messages annually. To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, X, YouTube, Facebook and Instagram.
