T+2 industry implementation playbook

Gearing up for transformational change

The settlement period for in-scope securities traded on the secondary market in the United States is currently trade date plus three business days, commonly referred to as T+3. The financial services industry, in coordination with regulators, is planning to shorten the settlement cycle to trade date plus two business days (T+2) in Q3 2017.

T+2 industry implementation playbook

Playbook overview:

The playbook, prepared by Deloitte & Touche LLP in conjunction with the Industry Steering Committee (ISC) and as commissioned by the Securities Industry and Financial Markets Association (SIFMA) and the Investment Company Institute (ICI), provides a detailed timeline, milestones, and dependencies that impacted market participants should consider in order to migrate to a two-day settlement cycle (T+2).

The implementation timelines and milestones are dependent on regulators finalizing shortened settlement cycle rules in a timely fashion. There is significant risk that migration may be delayed if milestones are not met.

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.

The industry’s work with Deloitte Risk and Financial Advisory to develop an Implementation Playbook is a critical next step to help ensure that all market participants have the tools and knowledge they need to prepare their individual firms to be T+2 ready

- Tom Price, co-chair of the T+2 ISC and managing director of the Technology, Operations, and Business Continuity Group, SIFMA

The playbook consists of nine sections:

Sections one and two:
  • Overviews of the T+2 settlement cycle initiative and the Playbook
  • Trade processing
  • Asset servicing
  • Documentation containing remedial activities based on requirements described in the white paper
Sections three through nine:
  • Additional considerations and regulatory, testing and migration
  • Industry actions on the path forward to T+2
The products subject to the shortened settlement cycle include:
  • Equities 
  • Corporate bonds
  • Municipal bonds
  • Unit investment trusts
  • Financial instruments comprised of the securities products listed above
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