T+2 shortened settlement cycle

Gearing up for transformational change

​Ready or not, the migration to a shortened settlement cycle (T+2) is fast approaching. The development and implementation of modified systems and processes should be completed by Q3 2016. Between now and then, myriad activities need to be done that will require significant changes to a broad range of business areas, from trade processing, asset servicing, and documentation to regulatory compliance and reporting, testing, and migration.

T+2 industry implementation playbook

In conjunction with the Industry Steering Committee (ISC), Deloitte has prepared an industry playbook that provides a detailed timeline, milestones, and dependencies that impacted market participants should consider in order to migrate to a T+2 settlement cycle.

Shortening the settlement cycle is expected to yield benefits for the industry and market participants, including reduced credit and counterparty risk, operational process improvements, cash deployment efficiencies, increased market liquidity, lower collateral requirements, and enhanced global settlement harmonization.

Download the full playbook to ensure your organization is staying on top of its migration efforts.

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Major milestones are closer than you think

In our work with organizations across the financial services industry, we see a wide range of preparation and readiness levels. Some leaders have already defined their organizations’ business requirements and started working with vendors, while others have not yet established a project team or obtained funding.

Lagging behind could have significant consequences for your organization’s reputation and financial performance, including trades that fail because they cannot be settled within the required timeframe.

To see where your organization stands, read our full report.

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Are your T+2 trade processing changes on track?

​The move to a T+2 shortened settlement cycle will have a significant impact on systems and processes across a wide range of areas, from order management through post-settlement. While the individual changes are expected to be relatively straightforward, their sheer breadth and volume make it important to stay on schedule.

For organizations just getting started, a good first step is to conduct a thorough trade processing assessment—including a complete inventory of affected processes—to help identify required activities and resources, as well as budget for additional resources, hardware, and software. When planning, organizations should also consider the availability of IT personnel with in-depth knowledge of their internal trading systems (including legacy systems). Early review of trade processing could also provide opportunities to improve your organization’s operating infrastructure and transform the way your organization effectively addresses the business, technology, and operational risk.

To determine if your migration efforts are on track, read our full trade processing update.

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Using T+2 as a catalyst to improve asset servicing and corporate actions processing

The migration to a T+2 shortened settlement cycle is fast approaching. Along with this migration comes the need to make important changes to your asset servicing activities—especially the corporate actions process. The changes required by T+2 are not without risks. But those risks pale in comparison to the potential financial and reputational damage if your organization fails to properly update how corporate actions are handled.

The good news: Implementing T+2 can open the door to other opportunities for improving inefficient and inconsistent processes that are currently causing unnecessary risk.

To see how you can use T+2 as a catalyst to improve your asset servicing and corporate actions processing, read our full report.

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The biggest challenge in moving toward T+2 settlement? Testing.

Throughout the long migration to a T+2 shortened settlement cycle, the testing phase could be the most challenging for organizations. If you haven’t already begun planning for this next phase of migration, now is the time to start.

We’ve outlined key questions you should be asking to ensure your organization’s testing efforts are as comprehensive as possible. Because you only have one chance to get it right.

To make sure your organization is staying on track, read our full testing update.

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How Deloitte can support your T+2 implementation

Numerous leaders across the financial services industry have engaged Deloitte to assist with their organizations’ T+2 initiatives. Our deep knowledge of the T+2 playbook approach—combined with our advanced analytics tools and in-depth understanding of cross-functional impacts—can help accelerate implementation and migration. Also, our approach to testing and ability to manage and sequence complex dependencies reduces implementation risk and lays a strong foundation for success.

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