Oxygen Insights

On 28th May DTCC will be implementing wholesale SEC led change to the way in which the industry undertakes clearing & settlement within the domestic $ market. The banner headline is well known; a move to a T+1 settlement cycle, but the legislated change dictates so much more in the form of mandating previously optional Allocation, Confirmation & Affirmation clearing steps to drive harmonisation and settlement efficiency among Clearing Firms & market participants alike. Similarly, those now mandated trade life cycle steps are compressed into the first working day under T+1, necessitating process change, location strategy & quite possibly the adoption of new technology for Participant firms (21:00 NY deadline). Peripheral stock loan, Funding, & FX functions will also be duly impacted as organisations work to accommodate the loss of 24 hours in the current DTC trade lifecycle (perhaps most acutely felt by overseas investors in the $ market, particular those working against time zone differences). Industry readiness for the change is broadly strong, but recent survey evidence suggests that a significant number of Financial Institutions have not begun their Operational change journey. That disconnect in industry readiness for T+1 change has promoted some quarters of the Industry to suggest an uptick in DTC related Failed trade activity as high as 30%, with obvious ramifications for all parties directly, and indirectly, connected to Failed trade chains. Quite simply, the move to DTC T+1 settlement will drive settlement ratios, increase automation, & process efficiency for firms ready to embrace the new standard and leave unprepared organisations behind managing margin and reduced liquidity scenarios through increased Failed trade events and associated funding obligations. With 75 business day's until Go Live now is the time to assess the impact of T+1 on your organisation and take action. Oxygen Consulting is here to help with all your DTC T+1 needs. Our team of Operations practioners offer a broad range of assessment, design, implementation, and augmentation services tailored to your needs now and in future.