The EU, Switzerland and Liechtenstein have announced the same T+1 migration date as the UK.The UK moving to a T+1 settlement cycle is a significant market event that impacts a vast number of institutions and market participants, so it is imperative that it is implemented in a manner which takes into account the needs of such participants, as well as other factors such as learnings from shortened settlement in other jurisdictions, and consistency, where appropriate, said Matt Johnson, executive director for Institutional Trade Processing Product Management and Industry Relations at DTCC, in an interview with the World Federation of Exchanges.
Securities markets in the European Economic Area (EEA) operate in a very similar fashion in regard to the way transactions are agreed and instructed to the central securities depository (CSD), where an additional pre-settlement match occurs.
“Most of our clients invest across global markets. Having a unified T+1 migration will allow complete alignment across every market and remove the need for clients to create specific workflows or adopt nuanced processes. Synchronized accelerated cycles also pave the way to introduce full automation and straight through processing,” Johnson said.
In its implementation plan, the UK AST recommends that market participants begin preparing for an accelerated settlement cycle by implementing automated trade solutions to achieve T+1 settlement as soon as possible. In particular, the UK AST’s calls the completion of allocation and confirmation processes no later than 23:59 UK time on trade date (T+0). Automation is a key enabler for same day allocation and confirmation, helping market participants achieve T+1 settlement on all trades.
“Market participants need to start automating their post-trade lifecycle processes now to make T+1 a seamless and successful transition. Our solutions help firms achieve the level of automation required to meet accelerated settlement timelines,” he added.