03.08.2016
By Rob Daly Editor-at-Large

DTCC Preps for T+2

03.08.2016 By Rob Daly Editor-at-Large

The migration to a T+2 settlement environment for U.S. equities and fixed income trades has passed another milestone as the industry Steering Committee announced that the new settlement is slated to go live on September 5, 2017.

“For the next step, the Depository Trust & Clearing Corp. will create a testing environment that will operate for the better part of this year so that exchanges and other users can test scripts and be prepared for a go-live date in the third quarter of 2017,” Tom Sarkis, managing director and general manager of equity clearing services at DTCC, said on a webinar.

For many industry participants, most of the migration work until the live date likely will be one of updating processes rather than investing in new technology, according to fellow panelist Rob Palatnick, managing director and chief technology architect at the DTCC. “But there are others firms where it would be a change in technology,” he said.

Sarkis warned not assume the tasks at hand for each firm would be similar to another’s. “From a DTCC perspective we have to take in all our stakeholders, he said. “We must touch base will all constituents in the marketplace to see what they need to accomplish.”

That goes from the biggest dealers on Wall Street down the smallest firms relying on service providers, he added.

When panel moderator Alex Tabb, partner and COO at industry research firm Tabb Group, asked what would would be involved in shortening the settlement window further to T+1 or T+0, Rob Palatnick, managing director and chief technology architect at the DTCC said it was technically possible using the DTCC’s current infrastructure.

“The DTCC receives 10,000 transactions per second into our clearing and settlement systems every second,” he explained. “Every day we get hundreds or thousands of transactions that should have been transmitted on trade date but were submitted on settlement date. We run them through our clearing and settlement systems that day, we can do T+0.”

However, Sarkis quickly responded stating that you have to remember that this is an industry-wide conversation an as long as there are firms that use batch-processing in their settlement processes, the industry would never reach T+0.

“When we started the conversation about moving to a T+2 environment about two years ago, the discussion about adopting T+0 never came up,” he said.

Photo courtesy of DTCC

Related articles

  1. Trading Europe From ‘Across the Pond’

    Status grants clearing members clarity on the regulatory treatment of their exposures to OCC.

  2. The clearinghouses will be using a VaR methodology.

  3. Auerbach Grayson Launches U.S. Equities Trading Business
    Daily Email Feature

    FTX US Boosts Equities Business

    The US regulated cryptocurrency exchange has acquired Embed Clearing.

  4. BIS Warns on Asset Management

    'Crypto carnage’ has shown how meaningful protections for investors, markets, and the public are needed.

  5. Banks' Risk Management Seen as Lagging

    The enhanced margining model strengthens resilience and boosts capital efficiency.