DTCC announced that Sumitomo Mitsui Trust Asset Management is using DTCC’s Institutional Trade Processing (ITP) suite of services to accelerate trade processing as the industry sets its sights on the US move to a T+1 settlement cycle on May 28, 2024.
Sumitomo Mitsui Trust Asset Management has adopted DTCC ITP’s CTM, including CTM’s Match to Instruct (M2i) workflow as well as leveraging TradeSuite ID, ALERT, and Settlement Instruction Manager to fully automate their post-trade processing and support the achievement of same day affirmation (SDA) for cross-border transactions within the APAC region. It’s the first Japanese asset management firm to adopt ITP services through Nomura Research Institute’s (NRI) SmartBridge Advance, an offering made possible through collaborative efforts between DTCC and NRI.
Yosuke Hosokawa from Sumitomo, said in a statement: “As the US transitions to T+1 settlement, it is important that financial markets outside the US leverage automation to enable straight through processing and align with global standards. We are happy to collaborate with the wider industry to bring accelerated settlement to our clients.”
To achieve accelerated settlement, firms need to complete post-trade agreement and affirmation faster. This can be achieved by automating the allocation, confirmation, and affirmation processes. CTM, DTCC’s platform for the central matching of cross-border and US equity and fixed income transactions, automates the trade confirmation process.
CTM’s M2i workflow leverages the central matching capabilities of CTM, as well as SSI enrichment via ALERT. With this workflow, which includes affirmation options depending on the broker’s setup, trades that are allocated, confirmed, and matched by the institutional investor and its brokers in CTM will automatically trigger trade affirmation and delivery of instructions for Depository Trust Company (DTC)-eligible securities directly to the US depository for settlement.
When combined with Settlement Instruction Manager, which automatically generates and sends settlement instructions to custodians and interested third parties, users can more effectively manage and monitor the lifecycle of a trade through to settlement finality.
In Japan, regulatory mandates require appointed trust banks to oversee their underlying investment managers’ trading activities and be included in the pre-settlement, post-trade communications chain. Settlement Instruction Manager enables the “soto-soto” arrangement with trust banks where investment managers send settlement instructions directly to their custodians simultaneously with the trust banks. The trust banks are given a copy of the settlement instructions for record keeping purposes. This helps enable the achievement of SDA and T+1 settlement within the APAC region. Sumitomo Mitsui Trust Asset Management is the first regional asset management firm to utilize the soto-soto arrangement among DTCC’s ITP clients.
“We are pleased to partner with Sumitomo Mitsui Trust Asset Management to bring best practice capabilities that enable accelerated settlement in the region,” said Val Wotton, managing director and general manager at DTCC Institutional Trade Processing. “As we look toward the US move to T+1, achieving faster time to settlement for both cross-border and domestic transactions is more important than ever. ITP’s suite of services is uniquely positioned to enable counterparties to reach settlement finality faster while seamlessly connecting them to thousands of counterparties around the world.”