T+1 SECURITIES SETTLEMENT
INDUSTRY IMPLEMENTATION PLAYBOOK
Including a detailed implementation schedule, interim milestones, and identified dependencies
Published: August 2022
Last Updated: December 2023

The information in this Playbook was prepared by Deloitte & Touche LLP (Deloitte) as
commissioned by the Securities Industry and Financial Markets Association (SIFMA) and theInvestment Company Institute (ICI).
This Playbook contains general information only, and SIFMA, ICI, and Deloitte are not, bymeans of this document, rendering accounting, business, financial, investment, legal, tax, orother professional advice or services. The information presented in this Playbook is foreducational purposes only. SIFMA, ICI, and Deloitte make no representation or warranty to
the accuracy of the information and the information in this Playbook is not to be viewed as an
authoritative statement on the quality and/or appropriateness of an individual organization’s
practices.
SIFMA, ICI, and Deloitte provide no assurance over the accuracy or completeness of therequirements for any particular organization’s readiness. This Playbook is meant to provide aframework to assist organizations in performing their own analysis. Before making any
decision or taking any action that may affect your organization, one should consult a qualified
professional advisor. SIFMA, ICI, and Deloitte shall not be responsible for any loss sustainedby any person who relies on this Playbook.
As of February 15, 2023, the U.S. Securities and Exchange Commission (SEC) has announced
the rule is final. This Playbook has been updated to reflect changes from the final rule.
While The Depository Trust & Clearing Corporation (DTCC) is not an author of this Playbook,
DTCC provided consulting support for SIFMA and ICI in preparing this Playbook.
This Playbook contains general information only, and DTCC is not, by means of this document,
rendering accounting, business, financial, investment, legal, tax, or other professional advice
or services. The information presented in this Playbook is for educational purposes only. DTCC
makes no representation or warranty to the accuracy of the information and the informationin this Playbook is not to be viewed as an authoritative statement on the quality and/or
appropriateness of an individual organization’s practices.
DTCC provides no assurance over the accuracy or completeness of the requirements for any
particular organization’s readiness. This Playbook is meant to provide a framework to assist
organizations in performing their own analysis. Before making any decision or taking any
action that may affect your organization, one should consult a qualified professional advisor.
DTCC shall not be responsible for any loss sustained by any person who relies on this Playbook.

1

Contents
1

Introduction ___________________________________________________________ 7

1.1

Executive Summary _____________________________________________________________ 7
1.1.1. T+1 Industry Implementation Timeline and Milestones .............................................................................9
1.1.2. T+1 Industry Implementation Activity Dependencies ...............................................................................10
1.1.3. T+1 Market Participant Implementation Timeline and Milestones ..........................................................11

1.2

Industry Efforts on the Road to T+1 _______________________________________________ 12
1.2.1. Brief History of the Settlement Cycle: T+5 to T+2.....................................................................................121.2.2. T+1 Accelerated Settlement Cycle Initiative .............................................................................................121.2.3. Lessons Learned from T+2 Migration........................................................................................................14
1.2.4. Global Markets ..........................................................................................................................................14
1.2.5. Product Scope ...........................................................................................................................................15
1.2.6. Baseline Metrics for T+1 ...........................................................................................................................18

2

Playbook Overview _____________________________________________________ 22

2.1

Purpose and Goal _____________________________________________________________ 22

2.2

Approach ____________________________________________________________________ 22

2.3

Navigation ___________________________________________________________________ 22
2.3.1 Topics .........................................................................................................................................................222.3.2 Impact Assessment and Implementation Considerations..........................................................................23
2.3.3 Dimension Table.........................................................................................................................................24

3

Trade Processing _______________________________________________________ 26

3.1

Introduction _________________________________________________________________ 26

3.2

Timeline and Milestones ________________________________________________________ 26

3.3

Impact Assessment and Implementation Considerations ______________________________ 26
3.3.1 Trading Systems and Reference Data ........................................................................................................27
3.3.2 Trade Matching ..........................................................................................................................................36
3.3.3 Trade Affirmation .......................................................................................................................................39
3.3.4 Physical Securities ......................................................................................................................................43

4

Asset Servicing _________________________________________________________ 46

4.1 Introduction ____________________________________________________________________ 46
4.2 Timeline and Milestones ___________________________________________________________ 46
4.3Impact Assessment and Implementation Considerations __________________________________ 46
4.3.1. Ex-Date Changes .......................................................................................................................................48
4.3.2. Cover/Protect Date Determination ..........................................................................................................52
4.3.3. Corporate Actions Processing Summary ...................................................................................................56
4.3.4. Dividend Reinvestment Plans ...................................................................................................................582

5Documentation ________________________________________________________ 59

5.1 Introduction ____________________________________________________________________ 59
5.2 Timeline and Milestones ___________________________________________________________ 61
5.3 Impact Assessment and Implementation Considerations _________________________________ 61
5.3.1. External Documentation ...........................................................................................................................62
5.3.2.Internal Documentation ............................................................................................................................67
5.3.3.Customer and Staff Education ...................................................................................................................68
5.3.4. Written Agreements or Policies and Procedures ......................................................................................69

6

Securities Lending ______________________________________________________ 72

6.1 Introduction ____________________________________________________________________ 72
6.2 Timeline and Milestones ___________________________________________________________ 72
6.3 Impact Assessment and Implementation Considerations _________________________________ 73
6.3.1. Securities Lending Processes and Procedures ..........................................................................................73
6.3.2. Stock Loan Recall.......................................................................................................................................74
6.3.3. Margin Calculations Processes ..................................................................................................................76
6.3.4. Master Securities Loan Agreement ...........................................................................................................77
6.3.5. Regulatory Considerations ........................................................................................................................77

7

Prime Brokerage _______________________________________________________ 79

7.1 Introduction ____________________________________________________________________ 79
7.2 Timeline and Milestones ___________________________________________________________ 79
7.3 Impact Assessment and Implementation Considerations _________________________________ 80
7.3.1. Review Client Onboarding Documentation and Processing Dependencies ..............................................81

8

Funding and Liquidity Considerations ______________________________________ 83

8.1 Introduction ____________________________________________________________________ 83
8.2 Timeline and Milestones ___________________________________________________________ 83
8.3 Impact Assessment and Implementation Considerations _________________________________ 83
8.3.1. Liquidity and Collateral Management .......................................................................................................84
8.3.2. FX Considerations and Funding.................................................................................................................86
8.3.3 Intraday & End of Day DTCC Settlement Processing ..................................................................................869Additional Considerations ________________________________________________ 88

9.1 Introduction ____________________________________________________________________ 88
9.2 Timeline and Milestones ___________________________________________________________ 88
9.3 Impact Assessment and Implementation Considerations _________________________________ 88
9.3.1 Global Considerations ................................................................................................................................88
9.3.2 Options Exercise and Assignment ..............................................................................................................91
9.3.3 Primary Offerings .......................................................................................................................................933

9.3.4 Reconciliations for Errors/Fails ..................................................................................................................95
9.3.5 Buy-Side Considerations ............................................................................................................................98
9.4.6 Additional Recommendations and Considerations ..................................................................................100

10Regulatory Changes ___________________________________________________ 101

10.1 Introduction __________________________________________________________________ 101
10.2 Timeline and milestones _________________________________________________________ 101
10.3 Impact Assessment and Implementation Considerations _______________________________ 101
10.3.1 Regulatory changes ................................................................................................................................102

11

Testing and Migration__________________________________________________ 107

11.1 Introduction __________________________________________________________________ 107
11.2 Timeline and Milestones _________________________________________________________ 107
11.3 Impact Assessment and Implementation Considerations _______________________________ 107
11.3.1 Develop Internal and Industry Test Plans ..............................................................................................108
11.3.2 Migration ...............................................................................................................................................111

12

Path forward _________________________________________________________ 112

12.1 Introduction __________________________________________________________________ 112
12.2 Timeline and Milestones _________________________________________________________ 112
12.3 Next Step Activities _____________________________________________________________ 112
12.4 Summary _____________________________________________________________________ 113

13

Appendix ____________________________________________________________ 114

13.1 T+1 Industry Implementation Timeline & Milestones __________________________________ 114
13.2 T+1 Industry Implementation Activity Dependencies __________________________________ 115
13.3 T+1 Market Participant Implementation Timeline & Milestones __________________________ 117
13.4 Heat Map ____________________________________________________________________ 118
13.5 Product List ___________________________________________________________________ 118
13.6 Baseline Metrics for T+1 _________________________________________________________ 121
13. 7 T+1 Trade Processing Comparison Chart ____________________________________________ 124
13.8 Documentation ________________________________________________________________ 128
13.9 Implementation Activities Tables __________________________________________________ 130
13.10 Dimensions Tables ____________________________________________________________ 159
13.11 Regulatory Bodies _____________________________________________________________ 169
13.12 Sample Implementation Activities Table ___________________________________________ 171
13.13 Sample Dimensions Table _______________________________________________________ 171
13.14 T+1 Settlement Trade Flow ______________________________________________________ 1724

13.15 T+1 Trade Processing Flow Chart _________________________________________________ 172
13.16 FX and Securities Timeline ______________________________________________________ 173
13.17 DTCC Operational Timeline ______________________________________________________ 173

14 Glossary ________________________________________________________________ 174

5

Contributors
SIFMA and its members

Tom Price, Managing Director, Technology, Operations, Business Continuity
tprice@sifma.org

Anthony Macchiarulo, Senior Associate, Financial Services Operations
amacchiarulo@sifma.org
Betsy Gilligan, Assistant Vice President, Financial Services Operations & Assistant General Counsel
egilligan@sifma.org

ICI and its members

Jeff Naylor, Chief Industry Operations Officer
jeff.naylor@ici.org
RJ Rondini, Director, Securities Operations
rj.rondini@ici.org
Martin Burns, Principal, ActioCon LLC
mburns@ici.org
Joanne Kane, Chief Industry Operations Officer (through March 2023)

Depository Trust & Clearing Corporation

John Abel, Executive Director, Clearance and Settlement Product Management
jabel@dtcc.com

Robert Cavallo, Director, DTC Clearance and Settlement Product Management
rcavallo@dtcc.com

Deloitte & Touche LLP 1
Bob Walley, Principal
rwalley@deloitte.com

Mara Gauger, Senior Manager
mgauger@deloitte.com
Cody Devine, Manager
codevine@deloitte.com
Henry Bourn, Manager
hbourn@deloitte.com
Payton Emery, Consultant
pemery@deloitte.com
Sebastian Bassolino, Consultant
sbassolino@deloitte.com
1
Deloitte also wishes to thank the following individuals for their contributions to the development of this Playbook: Peter Brown (Senior
Manager), Michael Jones (Senior Manager), Mukundan Krishnan (Solution Manager), Eleanor Fina (Manager), Sayani Paul (Solution Advisor).

6

1 Introduction
1.1 Executive Summary
In 2017, the standard settlement cycle for securities traded on the secondary markets in the United States(US) was shortened to trade date plus two business days, commonly referred to as T+2. The financial
services industry, in coordination with regulators 2, is actively preparing to shorten the standard
settlement cycle to trade date plus one business day (T+1). This transition is expected to yield numerous
benefits for investors and market participants, including reduced costs, increased market efficiency, andreduced settlement risk.
The Securities Industry and Financial Markets Association (SIFMA) 3, the Investment Company Institute(ICI) 4, and the Depository Trust & Clearing Corporation (DTCC) 5, together with Deloitte & Touche LLP(Deloitte) 6, published Accelerating the U.S. Securities Settlement Cycle to T+1 7 in December 2021 whichsummarized the Industry Working Group’s (IWG) 8 findings and industry-level recommendations for thechanges necessary to migrate the securities settlement cycle to T+1. Since that time, market participants
have been analyzing the impacts of T+1 within their respective organizations to identify the changes
necessary and critical dependencies in order to successfully manage this transition.
2

On February 9, 2022, the Securities and Exchange Commission (SEC) issued a proposal to shorten the securities settlement cycle from T+2 to
T+1. See Shortening the Securities Transaction Settlement Cycle, Exchange Act Release No. 94196 (Feb. 9, 2022) (SEC Rule Proposal). February
15, 2023, the SEC released its Final Rule to transition to an accelerated settlement cycle on May 28, 2024. [Release Nos. 34-96930, IA-6239; FileNo. S7-05-22] (SEC Final Rule).
3

About SIFMA. SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. andglobal capital markets. On behalf of our industry’s nearly 1 million employees, we advocate for legislation, regulation and business policy
affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry
coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We
also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S.
regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org

4

About ICI. The Investment Company Institute (ICI) is the leading association representing regulated funds globally, including mutual funds,
exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs) in the United States, and similar funds offered to investors injurisdictions worldwide. ICI seeks to encourage adherence to high ethical standards, promote public understanding, and otherwise advance theinterests of funds, their shareholders, directors, and advisers. ICI’s members manage total assets of U.S.$29.1 trillion in the United States,
serving more than 100 million U.S. shareholders, and U.S.$9.6 trillion in assets in other jurisdictions. ICI carries out its international workthrough ICI Global, with offices in Brussels, London, and Washington, DC.
5

About DTCC. With over 45 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry.
Industry owned and governed, the firm simplifies the complexities of clearing, settlement, asset servicing, data management, data reportingand information services across asset classes, bringing increased security and soundness to financial markets. In 2020, DTCC’s subsidiaries
processed securities transactions valued at more than U.S. $2.3 quadrillion. Its depository provides custody and asset servicing for securities
issues from 170 countries and territories valued at U.S. $73.5 trillion. DTCC’s Global Trade Repository service, through locally registered,licensed, or approved trade repositories, processes 15 billion messages annually.
6

About Deloitte. As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see
www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under therules and regulations of public accounting. This publication contains general information only and Deloitte is not, by means of this publication,
rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute forsuch professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any
decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible
for any loss sustained by any person who relies on this publication.
7
Accelerating the U.S. Securities Settlement Cycle to T+1, Accelerating U.S. Securities Settlement Cycle T+1 Report (sifma.org), December 1,
2021.
8

Industry Working Group participation consisted of 800+ subject matter advisors representing over 160 firms from buy- and sell-side firms,
custodians, vendors, and clearinghouses.

7

This document, the “T+1 Securities Settlement Industry Implementation Playbook (Playbook),” outlines
a detailed approach to identifying the potential impacts, implementation activities, implementation
timelines, dependencies, and risk impacts, that market participants should consider in order to prepare
for the impending transition to a T+1 Settlement Cycle. Firms should use this playbook as a guide to
identify the areas impacted by shortening the settlement cycle and the various considerations that should
be contemplated. Every firm has a different infrastructure, different businesses, clients, as well as
operational process and geographies which all need to be taken into consideration. On February 15, 2023,
in an open meeting, the SEC voted to adopt the proposed rule to accelerate the settlement cycle to one
day, i.e., T+1. As a result, the United States will transition to T+1 on May 28, 2024.9 Canada will transition
to T+1 on May 27, 2024. 10 It has been further announced that Mexico will consider making the transition
to T+1 settlement at the same time as Canada. At time of publication the industry is pending final
confirmation from the Mexican regulators approving this transition.
The Playbook consists of fourteen sections. The first two sections provide overviews of the previous T+2
settlement cycle initiative and the approach taken for the Playbook. The next sections of the Playbook
describe Trade Processing, Asset Servicing, Documentation, Securities Lending, Prime Brokerage, andFunding and Liquidity Considerations. The remaining sections describe considerations for Regulatory
Changes, Additional Considerations (i.e., Global Considerations, Primary Offerings, Buy-Side
Considerations, etc.), Industry Testing and Migration Plans, and associated resources for market
participants to prepare for the transition to T+1.
For questions related to this Playbook, please contact the contributing authors referenced above.

9

See Supra note 2.

10

CCMA Announces Canadian T+1 Start Date: Monday, May 27, 2024, https://ccma-acmc.ca/en/wp-content/uploads/CCMA-AnnouncesCanadian-T1-Start-Date-March-14-2023.pdf

8

1.1.1. T+1 Industry Implementation Timeline and Milestones
The illustration below shows the timeline of T+1 implementation and associated milestones across theindustry. The implementation activities are categorized by market participant implementation, industry
action, implementation, industry testing, and migration. Market participant implementation references
activities which are to be addressed by industry parties. Industry action reflects activities that will occur
across all industry participants. Implementation activities are related to the official transition date to U.S.
T+1 settlement of May 28, 2024. 11

11

See Supra note 9.

9

1.1.2. T+1 Industry Implementation Activity Dependencies
SEC Rule 15c6-1 will formally change the settlement date from trade date plus two (2) trade days (T+2) totrade date plus one (1) trade day (T+1). The adoption of SEC Rule 15c6-1 is the underlying dependency for
all below listed activities and associated dependencies. The table below reflects the implementation
activities listed in the table above in section 1.1.1 T+1 Industry Implementation Timeline and Milestones.

Migration

Industry Testing

Implementation

Industry Action

Implementation Activity

Dependency

T+1 Industry Implementation Playbook
developed and published

Review of industry systems and Procedures

T+1 Industry Implementation Playbook
Socialization

Dependent upon successful publication of Playbook

Financial advisor and client T+1 education

Dependent on successful publication of the Playbook

Industry Steering Committee (ISC) considers T+1
Dependent upon agreement of the ISC and the industry
migration dateOngoing ISC governance, oversight of industry
T+1 implementation, and creation of project
management office (PMO)

Dependent on path forward approach and schedulingapproach by the ISC to engage the industry on apredetermined schedule

ISC establishes T+1 Command Center

Dependent upon selection of migration date

Development of individual market participant’s
implementation plans

Dependent on proposed rules; should not be dependent of
final rule set

Execution of individual market participant’s
implementation plans

Dependent on the build and scope of development of market
participant plans and final rules

Individual market participant (internal), vendor,
and service bureau testing

Dependent upon internal vendor and service bureau systemenhancements, procedural updates, and internal user
acceptance sign-off

Development of DTCC high-level industry test
approach

Dependent on the preliminary DTCC test plan and creation of
DTCC T+1 Functional

Coordination of vendor and service bureau testplans with clients

Dependent upon completion of individual market participant
implementation, vendor, service bureau, and DTCC readiness

DTCC and market participant readiness forindustry testing

Dependent on DTCC detailed industry test plan andenvironment configuration

Round-trip industry testing with DTCC

Dependent on DTCC and market participant testing readiness

ISC “go” or “no-go” decision to move forward

Dependent on ISC review of testing results and overall
readiness determination

T+1 Command Center prepares for migration

Dependent on DTCC and market participant testing readinessIndustry migration to T+1 settlement

Dependent on the industry “go” or “no-go” decision

Assessment of post-migration activities

Dependent on migration to T+1

10

1.1.3. T+1 Market Participant Implementation Timeline and Milestones
The timeline below outlines the path for market participants in transitioning to T+1 with activities
organized across market participant implementation, industry testing and migration. Market participants
should use this timeline to assess and plan firm-specific readiness activities in parallel with other industry
parties. Market participant implementation references activities which are to be addressed by industry
parties. Industry action reflects activities that will occur across all industry participants.

11

1.2 Industry Efforts on the Road to T+1
1.2.1. Brief History of the Settlement Cycle: T+5 to T+2
The financial services industry moved from a T+5 to T+3 settlement cycle in 1995 to reduce systemic risk
and improve the operation of the U.S. clearance and settlement process. Rule 15c6-1 was adopted by the
SEC in connection with other measures taken by the securities industry to facilitate a smooth transition
from T+5 to T+3. Subsequently, on September 5, 2017, the securities industry successfully transitioned
from T+3 to T+2 as a result of thorough planning and coordination among industry participants across thesettlement ecosystem. This included a schedule of consistent industry calls, a robust communication
program, issuance of various publications (e.g., SIFMA, DTCC, and ICI T+2 Industry Implementation
Playbook), a targeted industry outreach program with a disciplined testing regime, and the broad supportof the industry and the regulators. The transition from T+3 to T+2 was intended to reduce systemic risk
and inefficiencies.

1.2.2. T+1 Accelerated Settlement Cycle Initiative
Stresses on the U.S. markets throughout 2020, 2021, and early 2022 refocused attention on thesettlement cycle for securities, including the risks associated in the present-day T+2 settlement cycle. In
response to such events, DTCC published a whitepaper “Advancing Together: Leading the Industry to
Accelerated Settlement” in February 2021 highlighting the benefits of moving to a T+1 settlement cycle.
In early 2022, an Industry Steering Committee (ISC) and associated Industry Working Group (IWG) was
formed to analyze the impacts of moving the U.S. securities markets to T+1 settlement as well as theassociated risks and benefits of doing so. The ISC determined in its December 2021 Accelerating the U.S.
Securities Settlement Cycle to T+1 report that moving to a T+1 settlement cycle will increase the overall
efficiency of the securities markets, mitigate risk, create better use of capital, and promote financial
stability, provided that the appropriate balance is achieved between increasing efficiencies and mitigatingrisk. 12
Below is a summary of the primary benefits anticipated by adopting T+1 settlement as referenced in the
Accelerating U.S. Securities Settlement Cycle T+1 Report 13:• Reduction of risk, particularly during periods of high volume and volatility: As the volume of unsettled
trades over a single trading day and the time between trade and settlement are reduced, there will bea reduction in systemic, counterparty, and operational risk across the settlement ecosystem,
particularly in periods of market volatility. Furthermore, T+1 settlement preserves the benefits ofsettlement netting at National Securities Clearing Corporation (NSCC). This significantly reduces thevolume of securities and money required to be moved across markets from a Clearing and Settlement
perspective on any given trading day.
• Reduction in liquidity requirements: With firms’ market and counterparty exposure over thesettlement period reduced, NSCC participants could see a reduction in margin requirements related to
NSCCs VAR Component and ultimately posted to NSCC by its participants. This reduction will allow
broker-dealers to better manage their capital and liquidity risks and better utilize their available capital.

12
Accelerating the U.S. Securities Settlement Cycle to T+1, Accelerating U.S. Securities Settlement Cycle T+1 Report (sifma.org and UST1.ORG),
December 1, 2021.]
13

Ibid.

12

For investment funds, T+1 will align the settlement cycle of registered U.S. mutual fund shares with theportfolio securities settlement cycle, thus improving cash and liquidity management.
• Capital and operational efficiencies: Capital and operational efficiencies can be grouped into three
categories: infrastructure modernization, standardization of industry processes and reduction in costs.
Each category is explained further below:‒ Infrastructure modernization: Technology adoption and automation of manual processes will
significantly reduce operational risk, increase productivity, and reduce friction for market
participants. The migration to T+1 provides opportunities to: Accelerate industry adoption of Straight-Through Processing (STP) and re-engineer certain
processes. For example, enabling match-to-instruct capabilities for trade affirmation andconfirmation, will eliminate redundant processes, save time and expenses, and reduce manualerrors Optimize margin calculations and reduce margin requirements among customers, brokers, andclearinghouses
 Firms may want to consider a pragmatic approach to infrastructure modernization utilizing
existing infrastructure and technology‒ Standardization of industry processes: By adopting the recommended best practices in this reportand implementing behavioral changes across the industry, market participants have an opportunity
to standardize and synchronize processes in order to facilitate greater transparency and approachreal-time/near-time access to critical data across the financial ecosystem. The migration to T+1
settlement may require standardization for certain industry processes in order to meet updated
timelines. Specifically, the migration provides opportunities to: Coordinate processing timelines, formalize and adopt industry best practices to facilitate
optimized information sharing and data transfers between counterparties, particularly forcritical reports or deadlines (e.g., sharing intraday trade allocation data between
counterparties)
 Formalize SLAs between counterparties to submit allocations as soon as possible in order tohave timely allocations
 Standardize processes for prime broker customer onboarding to enable automated capabilities
for recurring, time-sensitive processes (e.g., Form 1 Schedule A) Develop an automated and standardized straight-through settlement processing path for
unaffirmed institutional transactions and disaffirmed trades based on regulator guidance on
affirmations‒ Reduction in costs: The industry foresees long-term cost reduction for market participants and end
investors due to the benefits of T+1.
The following heatmap shows the widespread impacts across the post-trade ecosystem, market
participants, and legacy technologies that are batch cycle oriented. This visual is intended todifferentiate topics with a higher degree of impact (in orange coloring) from areas with a minimal impact(in light green and grey). The topics are listed in descending order of priority, with the overall T+1 Impact
Rating collated on the right.

13

1.2.3. Lessons Learned from T+2 Migration
The move to the T+2 settlement cycle in 2017 yielded 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 implementation required coordinated changes between market participants across a
broad range of functions, including trade processing, asset servicing, legal, compliance, and technology.
The same industry consensus, strong organizational leadership, and communication and coordination
among industry participants will once again be required to successfully migrate U.S. securities settlementfrom T+2 to T+1.

1.2.4. Global Markets
The Canadian Capital Markets Association (CCMA) announced plans to move Canadian markets to a T+1
settlement cycle on May 27, 2024. The CCMA is working with Canadian industry participants as well as
SIFMA, ICI, and DTCC to transition to a T+1 settlement cycle. 14
The Mexican market T+1 movement was driven by the Brokers Association (“AMIB”) in May 2023, and an
official proposal was announced on July 11, 2023. The Mexican authorities are expected to approve thetransition prior to the May 27, 2024, transition date to remain aligned with the Canadian and US markets.
In the Asian markets, the Securities and Exchange Board of India (“SEBI”) has introduced T+1 rolling
settlement cycle for stocks on an optional basis. This optional transition was intended to provide
14
CCMA Announces Canadian T+1 Start Date: Monday, May 27, 2024, https://ccma-acmc.ca/en/wp-content/uploads/CCMA-AnnouncesCanadian-T1-Start-Date-March-14-2023.pdf

14

flexibility to stock exchanges to offer either T+1 or T+2 settlement cycle while satisfying requests frommarket stakeholders to shorten the cycle. 15 Indian stock exchanges started a phased transition to a T+1
settlement cycle on February 25, 2022. Other Asian markets, however, have not indicated such atransition. 16
European and South American market associations such as the Association for Financial Markets in
Europe (AFME) and the His Majesty’s Treasury (HMT) Taskforce have started their efforts studying theimpacts of a T+1 settlement cycle. 17 The European Securities and Markets Authority (ESMA) recently
concluded its Call for Evidence on shortening the settlement cycle, specifically asking about a move to
T+1 settlement. 18 Although volumes outside of the United States may be relatively lower than domestic
flow, it appears that the metrics show that European and Asian firms have lower matching, instruction,and settlement performance. Market Participant Scope
The move to a T+1 settlement cycle will impact organizations across the financial services industry andthroughout the trade lifecycle. Impacted market participants include issuers, asset managers (‘40 Act
and non-‘40 Act funds), broker-dealers (retail, institutional, and prime brokerage), global custodians,
vendors, service bureaus, transfer agents, exchanges, clearing firms, buy-side firms, and depositories.

1.2.5. Product Scope
The products subject to the T+1 standard settlement cycle applies to securities that do not carry an
exemption from 17 CFR § 240.15c6-1(a). “Securities” defined in Section 3(a)(10) of the Exchange Act
covers, among others, equities, corporate bonds, UITs, mutual funds, ETFs, ADRs, and options. Applicationof 17 CFR § 240.15c6-1(a) extends to the purchase and sale of securities issued by investment companies
including mutual funds, private-label mortgage-backed securities, and limited partnership interests thatare listed on an exchange.
17 CFR § 240.15c6-1(a) does not apply to (1) contracts for the purchase or sale of limited partnershipinterests that are not listed on an exchange or for which quotations are not disseminated through an
automated quotation system of a registered securities association; (2) Security-based swaps; or (3)Contracts for the purchase or sale of securities that the Commission may from time to time, taking into
account then existing market practices, exempt by order.
17 CFR § 240.15c6-1(a) does not apply to contracts for the sale for cash of securities that are priced after
4:30 p.m. ET on the date such securities are priced and that are sold by an issuer to an underwriter
pursuant to a firm commitment underwritten offering registered under the Securities Act of 1933 or soldto an initial purchaser by a broker-dealer participating in such offering provided that a broker or dealer
shall not effect or enter into a contract for the purchase or sale of such securities that provides for

15“SEBI introduces T+1 settlement cycle for stocks on optional basis,” https://www.moneycontrol.com/news/business/sebi-introduces-t1settlement-for-stocks-on-optionalbasis41641.html#:~:text=The%20Securities%20and%20Exchange%20Board%20of%20India%20%28SEBI%29,will%20come%20into%20force%20
on%20January%201%2C%202022 (accessed July 23, 2022).
16
On February 25, 2022, the Securities and Exchange Board of India (SEBI) shifted to the T+1 settlement cycle; Stock market: Stock market
shifts to T+1 settlement cycle - The Economic Times (indiatimes.com).
17

Global Settlement: Implications for T+1 in Europe | DTCC.

18

ESMA Call for evidence on shortening the settlement cycle, 5 October 2023, | ESMA. https://www.esma.europa.eu/sites/default/files/202310/ESMA74-2119945925-1616_Call_for_evidence_on_the_shortening_of_the_settlement_cycle.pdf

15

payment of funds and delivery of securities later than the second business day after the date of thecontract unless otherwise expressly agreed to by the parties at the time of the transaction.
The Commission also modified 17 CFR § 240.15c6-1(b) to exclude security-based swaps from therequirements under 17 CFR § 240.15c6-1(a). Additionally, the Commission retained exemptions forcertain insurance products as well as exemption for certain foreign securities. The Commission did notinclude derivatives in the official scope of the rule, but there is interest from firms across the industry toalign derivatives with their underlying hedges.
The products subject to the shortened settlement cycle include equities, corporate and municipal bonds,
unit investment trusts, and financial instruments comprised of these security types. Financial instrumentsthat settle at the discretion of the distributor and have extended or shortened settlement periods in thecurrent settlement environment will not be impacted by T+1 implementation. Although listed options
settle T+1, the exercise and assignment process is subject to T+1. The following list includes products thatthe industry has identified as in scope for T+1 settlement. However, this list is not meant to be an
exhaustive list of products that could be impacted by T+1 implementation:

Common Stock

T+1 Impacted Product Scope 19
Equities

Common Stock Real Estate Investment Trust (REIT)
Convertible Common Stock
Equity Units
Equity Derivatives

Preferred Stock

Preferred Stock REIT
Tender Rate Preferred Stock
Auction Rate Preferred Stock
Convertible Preferred Stock
Preferred Perpetual

American Depositary Receipts (ADR)
Exchange Traded Funds (ETF)
Exchange Traded Products
Exchange Listed Limited Partnerships
Exchange Traded Notes

Mutual Funds

Fixed Income
Corporate Debt or Global Corporate Bond
Medium-Term Note
Corporate Debenture
Corporate Debt Derivative
Corporate Auction Rate Note
Convertible Corporate Debt
Debt Units
19

Securities that settle at the Federal Reserve are not included. This list relates only to DTC eligible securities.

16T+1 Impacted Product Scope 19
Zero Coupon Bond
Pass Thru Certificates (Corporate Debt)
Zero Coupon Denominated in Initial Principal Amount
Bearer/Callable Zero-Coupon Bond
Equipment Trust Certificate (Corporate Debt)
Demand Note
Corporate Other Tax Exempt
Corporate Insured Custodial Receipt
Credit Linked Note
Commodity Linked Note

Municipal Debt

Municipal Auction Rate Note
Municipal Insured Custodial Receipt
Index Linked (Municipal Bond)
Municipal Variable Mode Obligation (VMO)
Municipal Option Call Right
Municipal Other Tax Exempt
Municipal Other Tax Exempt
Municipal Note
Municipal Amortized Issue
Municipal Insured Custodial Receipt
Stepped Coupon (Municipal Bond)
Municipal Bond

Asset-Backed Security (ABS) or Global ABS
CMO Floater (non-agency)
Collateralized Mortgage Obligation (CMO)
Sinkable Floater (ABS)
Collateralized Loan Obligation
Mortgage-Backed Securities 20
Structured Product
Non-CMO/ABS Amortizing Issue

Derivatives

Warrants
RightsMoney Market Instruments

Certificate of Deposit
MMI Institutional Certificates of Deposit
Certificated Money Market - Periodic Payer
MMI Medium Term Note
Certificated Money Market Instrument
20

Mortgage-Backed Pass-Through Securities such as To Be Announced (TBAs) and Specified Pools that settle at the Federal Reserve are notincluded.

17T+1 Impacted Product Scope 19
MMI Medium-Term Bank Note
Commercial Paper (Money Market)
MMI Municipal Commercial Paper
MMI Bankers' Acceptance Note (BA)
MMI Corporate Commercial Paper
MMI Short-Term Bank Note
MMI Corporate VRDO/CP
MTN Medium Term Note
MMI Deposit Note
Municipal Amortized Issue
MMI Discount Note
Tender Rate Note
Unit Investment Trust (UIT)

Miscellaneous

When Issued Securities21

Corporate Insured Custodial Receipt
Limited Partnership
Private Investment Public Equity (PIPE)**Participants should inquire with the DTCC as it relates to securities that are “DTCC Eligible” that would
settle on T+1.**

1.2.6. Baseline Metrics for T+1
In order to conduct the necessary analysis of a firm’s settlement environments across their lines ofbusiness, firms should consolidate and analyze metrics (e.g., trade volumes, fail rates, allocation rates,
affirmation rates). The baseline metrics should be used to understand the order of magnitude of thesize/volume of any specific process. By using these metrics, firms can make conclusions as to the impactof the changes to the process or perhaps where there are specific performance bottlenecks. By capturing
metrics during the analysis period, firms will be able to establish a baseline from which future changes
and performance can be evaluated, as well as the ability to measure the impacts of T+1, before and after
the transition period. The metrics below are meant to be directional and is not meant be exhaustive.
The Baseline Metrics table can be found below. The dimensions columns are intentionally left blank toallow users of the Playbook customize the table to use during the analysis period. This table is meant to
be used an exercise that firms can undertake.

21

When issued securities trade when they are announced but not yet issued. However, when they are issued, they settle regular way.

18

T+1 Baseline Metrics
Dimensions
MetricCategory

MetricCount/
Value

Product

Legal
Entity/Lineof Business

U.S. Equities/DTCC eligible products

Trade Volume

Fixed income (e.g., US
treasuries/Bonds)/DTCC population
ETFs/Exchange Traded Note (ETNs)
ADRs/Master Limited Partnerships(MLPs)
Metrics for trades unmatched from T+1:
Due to SSI mismatch
Due to product not being Setup
Due to inventory
Due to counterparty missing
instructions
Due to mismatch on trade details

Fail Rates

Due to ongoing corporate action event
Fails resolved by manual intervention
Fails resolved by Client sending correct
trade file
Fails resolved by counterparty matching
Fails due to trades being “don’t know’d”(DK'd) 22
Average Time to Resolve Fail

Allocation
Rates

22

Average Daily Count of Allocations
Allocated on T

A DK’d trade results when one of the parties has a dispute or rejects the trade due to a given discrepancy.

19T+1 Baseline Metrics
Dimensions
MetricCategory

MetricCount/
Value

Product

Legal
Entity/Lineof Business

Allocated on T+1
Allocated on T+2
Percentage of allocations on trade date(T) after 7:00PM ET
Number of clients not sending trades on
T
Average Daily Affirmation Rate
Affirmed on T
Affirmation
Rates

Affirmed on T+1
Affirmed on T+2
Percentage of affirmations done after
9:00PM ET on T
Number of buy-in due to Insufficient
Stock

Buy-in (DTC)

Number of buy-in due to no locate inplace
Buy-in due to settlement error
Number of buy-in due incorrect place ofsettlement (e.g., trade booked in Italy
instead of DTC)
Number of trades manually touched
everyday

Trade Errors

Reason for trades being manually
touched
Trade failed due to manual error

20T+1 Baseline Metrics
Dimensions
MetricCategory

Corporate
Actions

MetricCount/
Value

Product

Legal
Entity/Lineof Business

Average volume of corporate action
eventsBi-lateral trades (daily, weekly, monthly,etc. for all)
Margin/Exposure/Collateralmanagement

Securities
Lending

Contract Compare breaks
Delivery versus Payment (DVP) vs Freeof Payment (FOP)
Recalls (Securities Industry Automation
Corporation (SIAC), etc.)
Reg SHO 204 (failure to deliver)
Number of manual checks

Payments

Average ACH timing
Average ACH volumes

21

2 Playbook Overview
2.1

Purpose and Goal

SIFMA, ICI and DTCC are actively leading the industry initiative to shorten the settlement cycle for the
securities markets in the US. They have formed an Industry Steering Committee (ISC) of industry
participants to provide the governance and consensus building. Additionally, Industry Working Groups(IWG) were formed to participate in industry working sessions to understand the impact and makerecommendations on implementation activities. The ISC worked with the IWG to determine the scope,requirements, and changes for the move to T+1 settlement, as published in the Final Report “Accelerating
the U.S. Securities Settlement Cycle to T+1.” This Playbook continues the ISC’s initial work to provide
guidance and activities necessary to implement the changes needed to meet the requirements for T+1
settlement. This Playbook is intended to serve as a framework and guide for impacted market participants
to leverage when implementing the shortened settlement cycle. While some sections may not pertain toeach organization, they should provide users with a resource to assist with its T+1 implementation plans.
This Playbook has been updated to reflect the final SEC rule released on February 15, 2024. 23

2.2 Approach
The Playbook captures and organizes the various considerations, requirements, and activities for a T+1
implementation as provided by members of the IWG through ongoing engagement and discussion since
its initiation in early 2021. The Playbook includes the following:• An illustrative T+1 industry timeline with interim milestones and dependencies designed to guideindustry action, market participant implementation, testing, and migration• An illustrative market participant timeline with interim milestones and dependencies designed to guideplanning, development, testing, and migration to T+1 for individual organizations• Impact assessment and a suggested implementation approach to make the required changes totransition to T+1• A high-level testing, migration, and industry readiness assessment plan to transition to T+1

2.3 Navigation
2.3.1 Topics
The Playbook provides timelines, milestones, and guidelines for market participants to assist in theplanning, development, testing, and migration to a T+1 settlement cycle. The Playbook sections provide
suggested activities across a number of business areas, including trade processing, asset servicing,
documentation, securities lending, prime brokerage, and funding and liquidity. Additionally, the Playbook
provides considerations for firms in the planning and execution of these impact assessment andimplementation considerations, including response to regulatory changes, testing, and business readinessfor the migration.

23
On February 9, 2022, the Securities and Exchange Commission (SEC) issued a proposal to shorten the securities settlement cycle from T+2 to
T+1. See Shortening the Securities Transaction Settlement Cycle, Exchange Act Release No. 94196 (Feb. 9, 2022) (SEC Rule Proposal). February
15, 2023, the SEC released its Final Rule to transition to an accelerated settlement cycle on May 28, 2024. [Release Nos. 34-96930, IA-6239; FileNo. S7-05-22]22

2.3.2 Impact Assessment and Implementation Considerations
The Playbook details the steps that organizations should consider for each impact assessment andimplementation consideration and provides a framework for impacted market participants to use as theyassess their respective organization’s requirements for T+1 settlement.
Market participants should develop comprehensive internal implementation plans in addition to theactivities described herein.
Activity

Implementation Task Description

Implementation Steps

For each activity, implementation steps are provided as a guide fororganizations as they conduct readiness activities in preparation forthe migration to T+1 settlement (Note: Certain implementation
steps will not be applicable to each organization).

Organization Participants (Front,
Middle, Back, IT, Vendor)

This column under each of the activities tables is intentionally left
blank to allow users of the Playbook to choose which organization
participants are responsible for specific implementation steps. This
will allow users to customize the table to align with theirorganization’s needs and to accurately reflect their organization’s
structure.

Systems

This column under each of the activities tables is intentionally left
blank to allow users of the Playbook to choose which systems apply
to specific implementation steps. This will allow users to customize
the table in order to align with their organization’s needs and toaccurately reflect their organization’s structure.

Market participants that choose to utilize activity tables should assess and capture their respective
organization’s requirements and structure within the Organization Participants and Systems columns. An
example of a “completed” activity table is below:
Activities to Configure Trading Systems
Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting Systems

Inventory trading systems,
1 including hardware andsoftware

All

Internal, Vendor

Determine systems with in2 scope products impacted by T+1
implementation

All

Internal

Examine changes required to
3 systems for settlement dateconfiguration

IT

Internal#

Implementation Steps

23

Activities to Configure Trading Systems
Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting Systems

All

Internal

Determine responsibility fortrading system changes

Front, IT

Internal, Vendor

Coordinate system changes with
6 internal and external
stakeholders

All

Internal, Vendor

7

Develop trading system andoperations test plans

Middle, Back, IT, Vendor

Internal, Vendor

8

Schedule and execute systemchanges

IT, Vendor

Internal, Vendor#

Implementation Steps

Assess impact of required
4 changes to upstream anddownstream systems
5

2.3.3 Dimension Table
The Playbook includes dimensions that organizations should consider when planning and executing theactivities for T+1 implementation. The table below provides a description of these dimensions:
Dimension

Description

Product Type

Resulting ramification on an organization's business model due to the T+1
settlement cycle
Implications for specific product types impacted by industry-level
requirement or sub-requirement

Vendor & Service
Bureau Support

Vendor and service bureau support required to implement end-to-end T+1
processes

Trading Venue

Trading venue specific requirements to changes in the settlement cycle

Risk & Compliance

Oversight of operational process, procedure, and policy changes impacted
by the T+1 implementation, including risk management and regulatorycompliance

Customer Experience

Resulting impacts of the shortened settlement cycle on internal orexternal customers

Technology Enablers

Technology updates and considerations required to support
T+1 implementation

Business Model24

In addition, the below table indicates which industry participants are most likely impacted by therespective activities:25

3 Trade Processing
3.1 Introduction
The move to T+1 settlement will require changes throughout the trade processing lifecycle to shorten theprocess from two to one business day. In the Final Rule, 24 to help guide organizations to transition to theT+1 settlement cycle, the following section identifies implementation activities for trade processing thatneed to be considered.

3.2 Timeline and Milestones
The following timeline illustrates the trade processing implementation activities and milestones necessary
to meet a May 28, 2024, U.S. T+1 implementation:

3.3 Impact Assessment and Implementation Considerations
The dimensions detailed below should be considered by firms when assessing trade processing in a T+1
settlement:
Dimension

Impacted?

Business Model

Potential
ImpactProduct Type

Potential
Impact24

See SEC Final Rule Page 2;

Description
Changes in the trade processing lifecycle are not expected tohave a large impact on organization’s business models. Theremay exist staffing work considerations. Tooling to automate
these processes may require different skill set requirements forteams.
In-scope products should be evaluated, and trading processes
and systems should be configured for T+1 settlement toaccount for various product types correctly (e.g., fixed income
vs. equities).

26

Dimension

Impacted?

Description

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus should configure trading systems
for T+1 settlement in order to avoid risk (e.g., financial,
reputational) to their customer organizations.

Trading Venue

None

Risk & Compliance

CustomerExperience

Technology
Enablers

Potential
ImpactTrading venues are not likely to be changed or largely impacted
by trade processing with a T+1 settlement.
Organizations that do not properly transform trade processes
and relevant systems for the new settlement period may
compromise the ability to execute and settle trades inaccordance with regulatory guidance.

Potential
ImpactIncorrectly configured trade processes and systems may cause
upstream and downstream implications for internal functions(e.g., reconciliation, income processing) and impact externalclients (e.g., client statements, trade confirmations). Issues may
also result in failed trades for external customers. Organizations
should consider the customer experience and user interface
continuity when scheduling trading system changes.

Potential
ImpactOrganization’s trading systems should prepare for settlement
date configuration errors that may arise and impact upstream
and downstream functions that rely on information from thetrading systems.

The participants impacted table below indicates which industry participants are most likely impacted bytrade processing:

3.3.1 Trading Systems and Reference Data
Reference data and trade processing systems must be re-configured for T+1 as standard settlement.

3.3.1.A. Configure Trading Systems
Trade processing systems that support the lifecycle of a trade that are currently configured for T+2
settlement must be updated to support T+1 settlement as a regular way/standard settlement.
Organizations will need to review the configurations to understand how the settlement dates are defined.
If needed they will have to re-configure trading systems for T+1 settlement and should consider
conducting a trading system assessment early in the T+1 implementation analysis and planning process.
Firms should consider the following when evaluating trade processing systems to support T+1 settlement
processes:
27•

Security master initiation and maintenance•

Customer account openings and management•

Margin•Batch cycle timing•

Standardization of settlement instructions•

Trade allocation instruction•

Real time trade matching and affirmation•

Trade confirmations•

Implement controls to reduce the manual work required on T+1 for cancel and corrected trades•

Availability of IT personnel with comprehensive knowledge of internal trading systems, including
legacy and future-state systems

By performing this assessment and evaluating these considerations, firms will identify resource needs aswell as additional trading system hardware and software expenses to ensure a successful configuration of
trading systems.

Activities to Configure Trading Systems
Activities to Configure Trading Systems#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory trading systems, including
hardware and software (completeness1 check)2

Determine systems with in-scope products
impacted by T+1 implementation

Examine changes required to systems forsettlement date configuration (e.g.,3
hardcoding vs. logic in programs)
4

Assess the impact of required changes to
upstream and downstream systems

Determine responsibility for trading systemchanges (proprietary vs. external vendor and5
service bureau)
6

Coordinate trading system changes withinternal and external stakeholders

7 Develop trading system test plans
28

Activities to Configure Trading Systems#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute system changes(consider customer experience and user
8 interface continuity when scheduling trading
system changes)

3.3.1.B. Update Reference Data
Organizations must update their reference data (e.g., the asset type, counterparty information), security
pricing data, and standardized settlement instructions (SSIs), for a T+1 settlement cycle. Firms should
consider how to update reference data to support the T+1 settlement process:•Consolidation of data feeds between new and legacy systems to centralize data management andexpand accessibility across business functions in order for data/instructions to be leveraged indownstream processes•

Centralize management of SSIs to facilitate automated updates and potentially reduce thenumber of trade fails’•

Assess root cause of fails and assess processes related to insufficient data and SSIs•

Develop and implement change management/training plans to facilitate implementation oftechnology solutions•

Adopt policies and procedures that enable participants to update SSI reference data in timely
manner prior to settlement, including reaching out to clients prior to settlement and updatinginternal systems prior to trade execution and/or settlement•

Firms should work with their counterparties, vendors, regulators, and clients to better understandtheir internal impacts related to data communication between the systems, the timing
requirements, system improvements, and process changes in preparation for this migration.

•

There should exist methods by which firms may assess the quality of existing reference data andrecommendations to review and remediate. As it relates to reference data, firms should
understand that reference data may include more than just SSI data validity and connectivity.
(Firms should leverage the baseline metrics table on pages 19 and 114).

The IWG suggests that organizations coordinate with vendors and service bureaus on reference datachanges to mitigate risks associated with the updates for T+1 implementation.

29

Activities to Update Reference Data
Activities to Update Reference Data#

Implementation Steps

1

Identify data sources and inventoryreference data (completeness check)2

Determine reference data impacted by T+1
implementation (coordinate with vendors andservice bureaus if necessary)

3

Assess the impact to downstream systems
and data and interconnecting activities forreference data changes

4

Examine impact of reference data changes onregulatory compliance requirements

5

Determine responsibility for reference datachanges (proprietary vs. external vendor andservice bureau)

6

Coordinate reference data changes withinternal and external stakeholders

7

Develop reference data test plans (consider
how to migrate reference data on T+1
migration date while continuing operations on
T+2 settlement)

8

Schedule and execute reference datachanges

9

Review SSI data quality

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

3.3.1.C. Review Trade Funding Processes and Payment Mechanisms
Organizations must review payment mechanisms used to move money in anticipation of trade settlement
to ensure availability of funding for settlement on T+1.
Organizations should consider amending trade funding processes (both institutional and retail), including
payment mechanisms (e.g., Automated Clearing House (ACH)), for T+1 settlement.
Foreign exchange processing and standing procedures should be reviewed to ensure matching currency
exchange with the shortened trade settlement cycle (e.g., an investor whose account only holds British
Pound Sterling (GBP) purchases a security in USD). In certain instances, organizations should ensure that
trade funding can be arranged for same day FX settlement to guarantee trade settlement.

30

Activities to Review Trade Funding Processes and Payment Mechanisms
Activities to Review Trade Funding Processes and Payment Mechanisms#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade funding, as well as payment
1mechanisms, are included in inventories forconfiguration
Examine upstream system, data, and process
2 changes to ensure that they do not interferewith the process for trade funding
Determine changes required to processes
3 related to trade funding including any global
trade funding
Assess how changes to payment
4 mechanisms impact policies, procedures,and controls
Develop capacity for mobile deposits orother electronic payment methods andrecommend these methods to customers
5(consider efficiencies to decrease check andAutomated Clearing House (ACH) processing
time for retail investors)
Coordinate changes to payment mechanisms
6 and processes related to trade funding withinternal and external stakeholders
7

Develop trade funding process and payment
mechanism test plans

Schedule and execute changes to trade
8 funding and payment mechanism processes,
policies, procedures, and controls
9

Communicate changes to trade funding
policies and procedures to customers

3.3.1.D. Revise Mutual Fund Settlement Dates
Organizations should revise settlement dates for mutual funds from T+2 to T+1 settlement. This is notexpected to have an operational impact on the majority of organizations because it only relates toextended settlement of mutual funds as the majority of funds already settle T+1.
31

Fund/SERV is DTCC’s platform for processing mutual funds, bank collective funds and other pooled
investment product trade activity. Mutual funds within Fund/SERV currently have Flexible Settlement
Feature that supports settling of investment products on Same Day (T), Next Day (T+1), T+2, or extended
settlement and those with a T+2 settlement date will have the option of revising the date to T+1.
Similar to the move from T+3 to T+2, Wealth Management Services will coordinate a systemic update of
securities with a T+2 settlement date to convert to a T+1 settlement date. An Important Notice with details
will be provided well in advance of the systematic conversion.
Organizations should also review fund settlement processes that may occur outside of DTCC’s Fund/SERV
platform to ensure that a shortened fund settlement cycle will not cause operational issues. It is
recommended that firms embrace automated systems in every possible circumstance to avoid any manual
mistakes to hinder the settlement on T+1.
Firms managing non-US mutual funds with exposure to US securities should review and consider any
potential cash management impact resulting from a fund share settlement cycle different from theunderlying securities cycle. Mutual funds may manage these particular liquidity needs by, among othermethods, using cash reserves, back-up lines of credit, or interfund lending facilities to provide cash tocover the settlement mismatch. 25

Activities to Revise Mutual Fund Settlement Dates
Activities to Revise Mutual Fund Settlement Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1 Inventory mutual funds
2

Determine whether to revise mutual fundsettlement dates

3

Assess changes required for mutual fundsettlement date configuration

4

Coordinate with DTCC to revise mutual fundsettlement dates within Fund/SERV

5

Develop test plans for settlement ofmutual funds

6

Schedule and execute mutual fundsettlement date changes

3.3.1.E. Update Exchange Traded Fund (ETF) Primary Market Create and Redeem Processes
ETF Fund Sponsors, Authorized Participants (APs), and respective service providers should review andadjust processes to accommodate ETF creation and redemption (primary market activity) for a T+1
25

See SEC Final Rule Pages 201-202;

32

settlement cycle. NSCC’s ETF service is the primary market for Create and Redeem eligible funds. The ETF
application processes these orders through CNS which provides a Central Counterparty Guarantee. The
NSCC Create and Redeem process for ETFs must be adjusted for T+1.
The following are considerations relating to ETFs that the IWG believes firms should consider whenreviewing processes internally:• Timing of batch cycles. NSCC current cutoff to receive ETF creation/redemption orders is until 8:00PM
ET on T in the primary cycle, with no plans to extend or change the 8:00PM ET cutoff for a transition toa T+1 settlement cycle. The batch-driven cycle is subject to tight timeframes with Agent Banks, AP’s and
NSCC waiting on end of day pricing and a small window for processing. The challenges late pricing poses
and proposed solutions are listed below:- NSCC will accelerate availability of end of day pricing to allow for near real time reporting of ETF
Creation and Redemption trades via NSCCs UTC near real time reporting- Currently, in T+2, the CNS exemption cutoff is 6:30PM ET; this may represent processing challenges
to members of CNS as this is the first time those ETF Create/Redeem trades are seen in ETF reporting
via the Instruction Detail Blotter. The timing of CNS exemption for T+1 will be set to 10:45PM ET• Collateral requirements. US traded ETFs holding non-US securities (where the settlement cycle is notT+1) should review and analyze impact to posting collateral resulting for basket of creation andredemption. These global ETFs are typically created and redeemed ex-clearing between ETF Agent/FundSponsor and AP’s. T+1 will result in compressed timelines and misalignment of global settlement cycles
which may create the following challenges:- On the creation side, APs will need to post collateral for an additional day in order for the ETF Agentto release the ETF shares on T+1, in cases when the underlying securities are international, settlingT+2 or longer. This will create cash management challenges especially if there is a need to sellunderlying securities in global markets with a longer than T+1 settlement. This misalignment insettlement cycles introduce the possibility of APs needing to establish lines of credit with thecollateral payment shifting a day forward.
NSCC has met with the ETF Agents and APs to review these concerns and determine if NSCC can develop
workflows with collateralization that may resolve these concerns.
• Other considerations. The following areas should be examined:- AP agreements to perform functions on behalf of clients should be reviewed for language to allow
flexibility for a shorter settlement cycle- Baskets holding IPO shares may see extended settlement depending on APs ability to deliver theshares but should not be impacted by accelerated settlement- Extended settlement for rebalancing will still occur- Retrieve real time messages from NSCC

33

Activities to Update ETF Primary Market Create and Redeem Processes
Activities to Adjust ETF Create and Redeem Processes#

Implementation Steps

1

Review ETF Create and Redeem processes
to meet agreed upon cut-off times

2

Develop test plans for ETF creation
and redemption

3

Schedule and execute ETF settlement
date changes

Supporting
Systems

Organization Participants(Front, Middle, Back, IT, Vendor)

3.3.1.F. Review Trade Order Management and Trade Capture Processes
Organizations that send Universal Trade Capture (UTC) messages to NSCC must be aware that the regular
way/standard settlement will be interpreted as T+1.
Organizations need to review trade order management and trade capture processes for T+1 settlement.
For those products eligible for T+1 (e.g., equities, corporate bonds, UITs), settlement within trade ordermanagement and trade capture processes, systems, and messages, should be updated to reflect T+1 asstandard settlement.

Activities to Review Trade Order Management and Trade Capture Processes
Activities to Review Trade Order Management and Trade Capture Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade order management and
1 trade capture are included in inventories forconfiguration (i.e., Trade Order Management
Solution (TOMS), UTC)
Determine changes required to processes
2 related to trade order management andtrade capture
Coordinate changes to processes related to
trade order management and trade capture3
with internal and external stakeholders (e.g.,
FIX, SWIFT)
4

Develop test plans for trade ordermanagement and trade capture34

Activities to Review Trade Order Management and Trade Capture Processes#

Implementation Steps

5

Schedule and execute process changes for
trade order management and trade capture

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

3.3.1.G. Standardize Communication Protocols for Trade Away Processes
The move to T+1 settlement will require the adoption of technology (e.g., CTM/M2i) and/or messaging
protocols (e.g., FIX) to automate the communication of trade away processes. 26 Relying on conventional
communication channel (i.e., email, faxes) for step out trades could lead to operational challenges andreduce the chances of timely order execution resulting in delayed allocation and affirmation. In addition,international timelines must adjust to allow for efficient and effective communication between market
participants. FIX and SWIFT messaging can help in creating a standardized process with operational
efficiency.

Activities to Standardize Communication Protocols for Trade Away Processes
Activities to Standardize Communication Protocols for Trade Away Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade away processes are
1 included in inventories for configuration(i.e., Trade Order Management Solution(TOMS), UTC)
Determine changes required for trade away
2 processes and relevant communication
protocols
Coordinate changes to processes related to
3 trade away communication protocols withinternal and external stakeholders (e.g., FIX)
Develop test plans for standardize
4 communication protocols for trade away
processes
Schedule and execute process changes for
5 standardization of communication protocols
for trade away processes

26
A trade away is a strategy that makes it possible to execute a trade through a broker or dealer other than the broker that is normally used to
manage trade executions.

35

3.3.2 Trade Matching
Organizations will need to configure trade matching systems for T+1 settlement and should consider
conducting a trade matching assessment early in the T+1 implementation planning process. Firms should
consider the following when evaluating trade matching systems and processes to support T+1 settlement
processes:•

Institutional Trade Processing (ITP) transactions must be affirmed by 9:00PM ET on T in order to beeligible for DTCs ID ANE service, Night cycle, and NSCCs Prime Broker Continuous Net Settlement(CNS) Flip service•

Adopting trade matching technology/systems, leverage automated workflows, and STP to ensure
trades can be affirmed by the DTCC 9:00PM ET cutoff on T•

NSCC Trades must be received by the 9:00PM ET cutoff on T from the exchanges and othermarketplaces in order to be eligible for CNS settlement in the DTC night cycle (if the transactions
meet the CNS eligibility requirements). NSCC trades will continue to be accepted until 1:30PM ET
on settlement date. These trades will be netted into CNS before or during the day cycle dependingon when they are received by NSCC

3.3.2.A. Update Trade Matching Processes
Organizations need to update trade matching processes and make changes as necessary to ensure
settlement on T+1.
Organizations using NSCC’s Real Time Trade Matching (RTTM) platform should assess processes to match
trades by 9:00PM ET on T for T+1 settlement. NSCC’s RTTM platform collects and processes trading activity
for fixed income products, including corporate bonds, municipal bonds, and Unit Investment Trusts (UITs)
settled through NSCC. The electronic platform, available through mainframe communications or a webbased service, enables organizations to manage transactions from order entry through post-settlement
regulatory reporting and to receive immediate confirmation of trade execution. NSCC currently requires
trades to be matched by 11:30AM ET on T+2. This will be changed to 9:00PM ET on T for trades to beeligible for NSCC and DTCs Night Cycle processing. NSCC will accept trades up to 1:30PM ET on T+1 to beeligible for current settlement date processing.

Activities to Update Trade Matching Processes
Activities to Update Trade Matching Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to trade matching are included ininventories for configuration
Examine upstream system, data, andprocess changes to ensure that they do not2interfere with the process for trade
matching

36

Activities to Update Trade Matching Processes#
3

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine changes required to processes
related to trade matching

Coordinate changes to processes related to
4 trade matching with internal and external
stakeholders
5 Develop test plans for trade matching
6

Schedule and execute process changes for
trade matching

3.3.2.B. Align to Industry-Recommended Allocation Timelines
The final rule states that firms should allocate trades as soon as technologically practical but no later thanend of day on T. The ISC recommended a best practice time for allocations to be completed for a move toa T+1 settlement cycle by 7:00PM ET on trade date (T) to ensure that firms have sufficient time to process
confirmations and affirmations by the DTCC affirmation cutoff of 9:00PM ET on T this offers less time thanthe current cutoff of 11:30AM ET on T+1. To meet these new cut-off times, it is recommended that firms
look to adopt technology solutions (e.g., DTCC’s ITP central trade matching system (CTM, M2i) and/or
messaging protocols (e.g., FIX,) to automate the communication of allocations. It is also recommended
that allocations are made as soon as practicable after the execution of order to ensure sufficient time for
confirmation and affirmation processing. Market participants located outside of the U.S. may need toconsider options to ensure institutional trades are fully allocated by 7:00 pm ET and fully affirmed by closeof the business ET. Participants should consider trade order/execution timing, available industry
solutions, operational process models and location strategy to ensure the new deadlines can be
Organizations should focus on building standardized and automated trade matching and affirmation
processes to reduce the number of unaffirmed trades for settlement and support the resolution of trade
breaks on T. Firms relying on a manual allocation process are highly recommended to adopt technology
to automate their processes.

Activities to Align to Industry-Recommended Allocation Timelines
Activities to Align Industry-Recommended Allocation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade allocations are included in1inventories for configuration

37

Activities to Align Industry-Recommended Allocation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Examine upstream system, data, andprocess changes to ensure that they do not
2 interfere with the process for trade
allocations
3

Determine changes required to processes
related to trade allocations

Coordinate changes to processes related to
trade allocations with internal and external
4
stakeholders
5 Develop test plans for trade allocations
6

Schedule and execute process changes for
trade allocation timelines

3.3.2.C. Configure Purchase and Sales Systems (PNS) and Institutional Processing Systems for Near-Time
Matching
Purchase and Sales systems must be re-configured for T+1 as standard settlement.

Activities to Configure Purchase and Sales Systems (PNS) and Institutional Processing Systems for NearTime Matching
Activities to Configure Purchase and Sales Systems for Near-Time Matching#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to Purchase and Sales systems for
1 near-time are included in inventories forconfiguration
Examine upstream system, data, andprocess changes to ensure that they do not
2 interfere with Purchase and Sales systems
for trade matching
Determine changes required to configure
3 Purchase and Sales system processes fornear-time trade matching38

Activities to Configure Purchase and Sales Systems for Near-Time Matching#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Coordinate changes to processes related tonear-time trade matching with internal and4 external stakeholders
Develop test plans for configuration of
5 Purchase and Sales systems for near-time
matching
Schedule and execute process changes for6 Purchase and Sales systems for near-time
matching

3.3.3 Trade Affirmation
The affirmation deadline for institutional trade affirmation at DTCC is changing from 11:30AM ET on T+1
to 9:00PM ET on T. This will impact the cut-off time for straight-through submission of affirmed trades to
DTC and NSCC for processing. For confirms that are not affirmed by the 9:00PM ET on T cutoff, thedeliverer can send deliver orders (NDOs) to settle these trades in the DTC night cycle and if the night cycleis missed, they can send day deliver orders (DOs) to settle these trades in the DTC Day cycle.
The reverse affirmation deadline for institutional trades is changing from its current 11:30AM ET on T+1
cutoff to 9:00PM ET on T.

3.3.3.A. Review Trade Affirmation Processes
Organizations need to review trade affirmation processes and make changes as required to ensure
settlement on T+1. The affirmation deadline at DTCC will be changed to 9:00PM ET on T from its present
11:30AM ET on T+1 cutoff. Firms will need to update technology systems and processes to accommodate
the new affirmation cut-off.
Industry participants are recommended to adopt technology (e.g., DTCC’s ITP CTM) and/or messaging
protocols (e.g., FIX) to automate the communication of allocations and CTM’s M2i to facilitate more timely
trade affirmations.

39

Activities to Review Trade Affirmation Processes
Activities to Review Trade Affirmation Processes#

Organization Participants

Implementation Steps(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to trade affirmation are included ininventories for configuration
Examine upstream system, data, andprocess changes to ensure that they do not2interfere with the process for tradeaffirmation
Determine changes required to processes
3 related to trade affirmation and new cutoff
time
Coordinate changes to processes related to
4 trade affirmation with internal and external
stakeholders
Develop test plans for affirmed andunaffirmed eligible institutional trade5
submission, prime broker transactions, andID Net transactions
6

Schedule and execute process changes foraffirmed trade submission

7

Utilize services (e.g., ITPs M2i) to achieve
maximum affirmations

3.3.3.B. Changes to the Timing of NSCC’s CNS Projection Reports
Organizations should consider the impact of changes to the CNS Projection Report timing and its impact
on their processes. Organizations need to update their processes to account for the new timings of NSCC’s
Projection Reports as part of a move to T+1 settlement. The CNS Projection Report that is distributed
today at 12:30AM ET on T+1 will be changed to 2:00AM ET on T+1. The NSCC CNS midday projection file
is moving from its current 12:00PM ET distribution on T+1 to 5:00PM ET on T+1. The NSCC CNS position
prior to Night Cycle report’s current distribution time is 7:30PM ET on T+1 and will be distributed at
9:45PM ET on T. The CNS position prior to the Day Cycle is moving from its current 12:30AM ET on T+1
distribution to 2:00AM ET on T+1.
Activity #1

Activity NameCNS Projection Report

Current State Time
12:30AM ET on T+1

Future State Target Time
2:00AM ET on T+1
40

Activity #2
3
4

Activity Name
NSCC CNS Midday
Projection File
NSCC CNS Position
Report (prior to Night
Cycle report)
NSCC CNS Position
Report (prior to the
Day Cycle)

Current State Time

Future State Target Time

12:00PM ET on T+1

5:00PM ET on T+1

7:30PM ET on T+1

9:45PM ET on T

12:30AM ET on T+1

2:00AM ET on T+1

Activities for Changes to the Timing of NSCCs CNS Projection Reports
Activities for Changes to the Timing of NSCCs CNS Projection Reports#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory projection reports, including
created projection reports and those
1 received and used from other organizations(i.e., cash projection reports, CNS
Projection Report)
2

Assess projection reports for changes fromT+1 settlement

Determine if settlement date changes to
3 projection reports will be automatically
captured or need to be manually updated
4

Coordinate changes to projection reports
with internal and external stakeholders

5

Develop test plans for activities related toprojection Reports

6

Schedule and execute changes for
projection reports

3.3.3.C. Align to Industry-Recommended Affirmation Timelines
While the move to T+1 will require a new DTCC affirmation cut-off time of 9:00PM ET on trade date, theIWG recommends that trades are allocated as soon as practicable or at the latest 7:00 PM ET on tradedate. After an order is executed to members, they should ensure that they have sufficient time for
confirmation and affirmation processing. Market participants located outside of the U.S. may need toconsider options to ensure institutional trades are fully allocated by 7:00 pm ET and fully affirmed by closeof the business ET. Participants should consider trade order/execution timing, available industry
solutions, operational process models and location strategy to ensure the new deadlines can be met.
41

Activities to Align to Industry-Recommended Affirmation Timelines
Activities to Align Industry-Recommended Affirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade affirmations are included in1inventories for configuration
Examine upstream system, data, andprocess changes to ensure that they do not
2 interfere with the process for tradeaffirmations
3

Determine changes required to processes
related to trade affirmations

Coordinate changes to processes related to
trade affirmations with internal and4external Stakeholders
5 Develop test plans for trade allocations,confirmations, and affirmations
6

Schedule and execute process changes for
trade affirmation timelines

3.3.3.D. Standardize Communication Protocols Among Affirming Parties
Many firms continue to rely on manual or outdated communication methods (e.g., emails, faxes) tocomplete trade settlement. These inefficient communication channels contribute to errors and delay
trade settlement. The move to T+1 settlement will require the adoption of technology (e.g., DTCC’s ITP
CTM/M2i) and/or messaging protocols (e.g., FIX) to automate the communication of allocations andremove the additional risk that comes from manual data communication methods.

Activities to Standardize Communication Protocols Among Affirming Parties
Activities to Standardize Communication Protocols Among Affirming Parties#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to communication protocols among
affirming parties are included in inventories
1 for configuration (i.e., Trade OrderManagement Solution (TOMS), UTC)
42

Activities to Standardize Communication Protocols Among Affirming Parties#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine changes required for affirming
2 parties and relevant communication
protocols
Coordinate changes to processes related toaffirming parties’ communication protocols
3with internal and external stakeholders(e.g., FIX)
Develop test plans for standardized
4 communication protocols among affirming
parties
Schedule and execute process changes for
5 standardization of communication
protocols among affirming parties

3.3.4 Physical Securities
3.3.4.A. Decommission of Physical Securities
There are ongoing industry efforts to eliminate both the issuance and handling of physical securities.
Market participants may consider and assess the decommission of physical securities for T+1 settlement.
This exercise will determine organization’s feasibility to achieve full dematerialization.

Activities to Decommission Physical Securities
Activities to Decommission Physical Securities#
1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory platforms supporting physicalsecurities delivery

Determine platforms supporting physical2 securities delivery impacted by T+1
implementation
Assess changes required to decommission
3 platforms supporting physical securities
delivery for T+1 settlement

43Activities to Decommission Physical Securities#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine responsibility for platform
4 changes (proprietary vs. external vendor
and service bureau)
5

Coordinate platform changes with internaland external stakeholders

6

Develop test plans for decommissioning
physical securities delivery

7

Schedule and execute changes todecommission physical securities

3.3.4.B Adjust Processes and Systems Related to Physical Securities
If market participants are unable to fully decommission physical securities, then review and enhancementof processes related to physical securities may be required for T+1 settlement. Given the time constraint
present in T+1, firms will be required to have previously located physical securities and ensure thosesecurities are in DTC in street name by settlement date.

Activities to Adjust Processes and Systems Related to Physical Securities
Activities to Adjust Processes and Systems Related to Physical Securities#

1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory platforms supporting physicalsecurities delivery

Determine platforms supporting physical2 securities delivery impacted by T+1
implementation
Assess changes required to platforms
3 supporting physical securities delivery forT+1 settlement
Determine responsibility for platform
4 changes (proprietary vs. external vendor
and service bureau, issuers)
5

Coordinate platform changes with internaland external stakeholders
44

Activities to Adjust Processes and Systems Related to Physical Securities#

Implementation Steps

6

Develop test plans for physical securities
delivery for T+1 settlement

7

Schedule and execute changes to physicalsecurities for T+1

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems45

4 Asset Servicing
4.1 Introduction
The move to T+1 settlement will require changes to asset servicing functions impacted by the shortened
settlement period to comply with new and revised regulations. To guide organizations implementing theT+1 settlement cycle, implementation activities related to asset servicing have been identified below.

4.2 Timeline and Milestones
The following timeline illustrates the asset servicing implementation activities and milestones necessary
to meet a May 28, 2024, U.S. T+1 implementation:

4.3Impact Assessment and Implementation Considerations
The dimensions detailed below should be considered related to asset servicing in a T+1 settlement:
Dimension

Impacted?

Business Model

None

Product Type

Potential
ImpactVendor & Service
Bureau Support

Potential
ImpactDescription
Changes related to asset servicing functions are not expected tohave a large impact on organization’s business models.
Impacted products could experience income payment errors
and operational issues if T+1 ruled ex-dates are not updated forT+1. This requires organizations to evaluate and enhancecurrent-state announcements with ex-dates, notification
announcement processes for all corporate actions and due billprocessing. In addition, businesses should determine theimpact a shortened cover/protect period has on theirprocesses.
To minimize risk to their customer organizations, vendors andservice bureaus should properly update processes and systems
related to ex-dates and cover/protect dates on their event
announcements. This includes reviewing and enhancing, if
necessary, data sources, notification announcements, due bill46

Dimension

Impacted?

Description
processing, interim accounting processes, liabilities related toreorganization events and stock record balances.

Trading Venue

Potential
ImpactRisk & Compliance

Potential
ImpactCustomerExperience

Technology
Enablers

Trading venues that do not properly update their rule set toestablish the ex-date for listed securities could cause risk (e.g.,security pricing, entitlements, out of balances, etc.) toparticipating organizations.
Risk (e.g., financial, reputational) and compliance issues related
to corporate actions (e.g., dividends, stock splits) may occur if
ex-date entitlements, notifications, and data are not updated toreflect the shortened settlement cycle. The DTC interim
account processes should be updated to prevent any issues
related to due bill processing. Regarding cover/protect period
following an event expiration, organizations should review andmodify reorganization announcements, inclusive of voluntary
reorganization instruction applications, internal processing
systems responsible for passing liabilities from one party toanother, and the stock record platform to account for positions
in different “boxes.”

Potential
ImpactIncorrect ex-dates or interim accounting data may cause
upstream and downstream implications for internal functions(e.g., reconciliation, income processing) and impact externalclients (e.g., client statements, processing errors).
Organizations face financial and reputational risk with incorrect
ex-dates causing erroneous pricing and the incorrect party
receiving the distribution proceeds. The passing of liabilities
related to voluntary reorganization event expirations including
cover/protect date processing should be updated for internalfunctions to avoid impacting clients (e.g., missing elections toparticipate in voluntary corporate action events, financial loss,etc.).

Potential
ImpactOrganizations should evaluate and, if necessary, enhance
technology platforms that support corporate action
announcements, pricing, and stock records (i.e., passing ofliabilities).

The participants impacted table below indicates which industry participants are most likely impacted byasset servicing:47

4.3.1. Ex-Date Changes
Corporate actions, such as rights, warrants, and income distributions that occur on securities that aretraded at securities exchanges, will trade either with the distribution or without the distribution near thetime of the event’s record date. To determine when the security is traded without the distribution, thesecurities exchange will establish (or referred to as “rule”) an ex-dividend date (ex-date) where the priceof the security is adjusted by the amount of the distribution. In the current T+2 settlement cycle typicallythe regular-way ex-date will occur prior to the record date of the event, falling on the trading day before
the record date whereas irregular-way ex-date occurs when ex-date is ruled after record date.
In a T+1 environment, ex-date and record date would be the same, commonly referred to as “regular way
ex-date.” With regular way ex-date, due bills are not necessary as any trade entitled to the dividend would
be settled on record date. However, due bills are required for any ex-date that is not a regular way exdate. The exchanges set ex-dates and typically will set a later ex-date (e.g., day after payment date) for
stock or large cash dividends that exceed 15-25% of the value of the stock. This practice helps to maintainmarket values because in a regular way ex-date, the price would typically drop by the value of the dividendon ex-date; however, the proceeds would not be paid until later. This undervalues the stock and impacts
portfolio modeling and purchasing power. Any irregular ex-date would still require a due bill.
Organizations must adjust the ex-date period for regular way ex-date and modify the due bill period
calculation for regular way and irregular ex-dates.

4.3.1.A. Configure Ex-Date Changes
A move to T+1 settlement will subsequently move the ex-date to the day of the record date of the event.
For T+2, the ex-date is calculated as T+1; for accelerated settlement, ex-date will fall on T. Most
organizations rely on supplied ex-date information from vendors and service bureaus, depositories, ortransfer, paying agents and needs to adjust systems and processes for capturing the provided ex-date
information. Organizations that rely on asset masters to derive ex-date entitlements should perform areview of logic used in systems and make process modifications.

Activities to Configure Ex-Date Changes
Activities to Configure Ex-Date Changes#

Implementation Steps

1

Identify and inventory instances where exdates are generated or received

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems48

Activities to Configure Ex-Date Changes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Conduct conversations with vendors and2 service bureaus to ensure that ex-dates arecaptured, tested, and approved
3

Assess changes required to systems for
capturing ex-dates

Review processes for corporate action events
4 to determine impact of ex-date changes
5

Examine impact of ex-date changes tocompliance and oversight requirements

Ensure materials regarding T+1 ex-date
6 implications are included in customer
communication plans
7

Develop ex-date and corporate action event
test plans

8 Schedule and execute ex-date changes

4.3.1.B. Adjust Ex-Date Notification Announcement Systems
To process regular way ex-date notifications and irregular ex-date notifications properly, impactedorganizations must make changes to their announcement systems or work with their vendor/service
bureau to ensure the changes are properly applied. Organizations need to adjust ex-date notification
announcement systems for T+1 settlement to ensure proper entitlements are calculated for corporate
action events.

Activities to Adjust Ex-Date Notification Announcement Systems
Activities to Adjust Ex-Date Notification Announcement Systems#

Implementation Steps

1

Identify announcement systems used for exdate notifications

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine impact to ex-date notifications
2 and announcement systems for T+1
settlement49Activities to Adjust Ex-Date Notification Announcement Systems#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Coordinate ex-date notification and3 announcement system changes with internaland external stakeholders
4

Develop ex-date notification andannouncement system test plans

5

Schedule and execute announcement systemchanges

Communicate changes to ex-date
6 notifications and announcement systemchanges to external organizations

4.3.1.C. Modify Internal Processing Systems that Calculate Ex-Dates
Organizations that derive the ex-date from internal trade processing systems must modify those systems
to account for the shortening of the ex-date period and address the downstream processing of that
information.
Organizations should consider adopting corporate action solutions that automate ex-date calculations andingest amendments into stock records.

Activities to Modify Internal Processing Systems that Calculate Ex-Dates
Activities to Modify Internal Processing Systems that Calculate Ex-Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data related
1 to ex-date calculations are included ininventories for configuration
Evaluate the impact on downstream processes
2 (internal and external) for system and ex-date
calculation changes
Determine responsibility for ex-date calculation
3 changes (proprietary vs. external vendor andservice bureau)
4

Coordinate changes with internal and external
stakeholders

50

Activities to Modify Internal Processing Systems that Calculate Ex-Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Develop internally calculated ex-date test plans(consider how to make changes on T+1
5
migration date while continuing T+2 settlement
operations)
6

Schedule and execute changes related tointernal ex-date calculations

4.3.1.D. Adjust Due Bill Processing
The due bill redemption period (i.e., irregular-way ex-dates) must be shortened by one business day. The
due bill redemption date will now fall on ex-date, with securities allocated to market participants on exdate +1. The processing of securities carrying a due bill will need to be adjusted for T+1 settlement. This
includes ex-date notifications as well as the redemption of instruments with a due bill attached.

Activities to Adjust Due Bill Processing
Activities to Adjust Due Bill Processing#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to due bill processing are included in
1 inventories for configuration
2

Determine changes required for due billprocessing

3

Coordinate due bill processing changes withinternal and external stakeholders

4 Develop test plan for due bill processing
5

Schedule and implement due bill processingchanges

4.3.1.E. Modify Interim Accounting Processes
DTC must modify the DTC interim accounting process to account for the shortened period. In addition,organizations need to modify interim accounting processes for T+1 settlement. Interim accounting is an
important part of the entitlement and allocation process. The interim accounting period is defined as theperiod during which a trade settling has income (e.g., interest, dividend) or a due bill attached to it. This
period extends from the record date plus one day up to the due bill redemption date, which will be equal
to the event’s ex-date.
51

During the interim accounting period, DTC facilitates the entitlements and allocation process (DTC’s
Distribution Service) systematically for both the buyer and seller of a transaction (at the omnibus level).
Without DTC’s interim accounting process, trades that will settle after the record date "with distribution"(those that entitle the receiver to the distribution) will have a due bill or income payment attached thatsits with the incorrect market participant. The distribution entitlement will then need to be handled
between the seller and the buyer of the security outside of DTC’s Distribution Processing Service in theform of a special payment order, wire, or postdated check equal to the amount of the distribution.
To prepare for the migration to T+1 settlement, DTC needs to review and modify the interim accounting
process to account for the shortened period and verify that income entitlement and tracking processes(e.g., due bill fail tracking, stock loan income tracking, and repo income tracking) are adjusted andfunctioning properly. Similarly, organizations should review their income entitlement capture and income
allocation processing systems.

Activities to Modify Interim Accounting Processes
Activities to Modify Interim Accounting Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to interim accounting are included
in inventories for configuration
Evaluate the impact on downstream
2 processes (internal and external) for interim
accounting process changes
Determine responsibility for interim
3 accounting process changes (proprietary vs.
external vendor and service bureau)
Coordinate interim accounting process
4 changes with internal and external
stakeholders
5 Develop interim accounting testing plans
6

Schedule and execute changes related tointerim accounting

4.3.2. Cover/Protect Date Determination
A T+1 settlement cycle will likely impact trading practices around the expiration dates of certain voluntary
corporate action events (e.g., tender offers, exchange offers, rights subscriptions). The issuer may often
offer a Guarantee of Delivery feature that allows investors to purchase securities on the offer’s expiration
date and still participate in the offer while their securities are in the process of settling. This is also known
as the cover/protect period where purchased, yet-to-settle securities are instructed in the form of aprotect and then that protect is subsequently “covered” once the securities settle. Typically, this52

cover/protect period is aligned to the market’s settlement cycle; however, there are exceptions where
the time to cover a protect may be shorter or longer. The period is ultimately defined by the issuer anddescribed in detail in the event’s offering materials. In the current cover/protect process, there are pain
points that exist based on obligations due to trading fails, where liability letters are often passed between
industry participants as well as collateral financing transactions (e.g., security loans, borrows). In a T+2
settlement cycle, the cover/protect period is often expiration date plus two (2) trading days. In a T+1
settlement cycle, the cover/protect period will be the expiration date plus one (1) trading day.

4.3.2.A. Review Reorganization Announcement Platform
DTC receives offering information from issuers/agents and adds the cover/protect dates on the event
announcement based on what is defined within the offering materials. The dates within the Participant
Tender Offer Program (PTOP) and the Participant Subscription Offer Program (PSOP) are updated basedon the event announcement to ensure that the cover/protect date (last day to cover protects) is reflected
properly based upon what is detailed in the offering documentation.
Organizations will need to review their reorganization announcement platforms for T+1 settlement.
Certain voluntary corporate reorganizations (e.g., tenders, rights offering) will provide the holder of the
security participating in the event the ability to guarantee the delivery (protect) of the security a set
number of days after the expiration of the offer. This “protect period” is typically set by the number ofdays it takes a security to settle. In the past the delivery period was two-days in a T+2 settlement cycle
and with the move to a T+1 settlement, the protect window should also shift to a one-day period.

Activities to Review Reorganization Announcement Platform
Activities to Review Reorganization Announcement Platforms#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that reorganization announcement
1 platforms and reference data are included
inventories for configuration
Evaluate the impact to downstream systems
and processes (internal and external) for2
reorganization announcement platformchanges
Determine responsibility for reorganization
announcement platform changes
3(proprietary vs. external vendor and service
bureau)Coordinate reorganization announcement
4 platform changes with internal and external
stakeholders

53

Activities to Review Reorganization Announcement Platforms#

Implementation Steps

5

Develop test plans for reorganization
announcement platforms

6

Schedule and execute changes related toreorganization announcement platforms

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

4.3.2.B. Modify Voluntary Reorganization Processing Applications
NSCC will require modifications to its voluntary reorganization processing application within its CNS
system to accommodate this change.
Organizations need to modify voluntary reorganizations processing applications for T+1 settlement. In
T+2, late instructions and late trades typically involved manual processes. However, in T+1, all manual
processes are encouraged to be automated. For example, leveraging instruction automation through yourservice provider can reduce manual processing.

Activities to Modify Voluntary Reorganization Processing Applications
Activities to Modify Voluntary Reorganization Processing Applications#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to voluntary reorganization
1
processing are included in inventories forconfiguration
Evaluate the impact to downstream
processes (internal and external) for2
voluntary reorganization processingchanges
Determine responsibility for voluntary
3 reorganization process changes (proprietaryvs. external vendor and service bureau)
Coordinate voluntary reorganization
4 processing changes with internal andexternal stakeholders
Develop test plans for voluntary
5 reorganization processing applications andvoluntary reorganization event processing
54

Activities to Modify Voluntary Reorganization Processing Applications#
6

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute changes related tovoluntary reorganization processing

4.3.2.C. Update Internal Processing Systems that Consume Cover/Protect Dates
Organizations that internally derive the cover/protect date must ensure that their systems are updated
to calculate cover/protect date as offer expiration plus one business day. Firms will need to update
internal processing systems that calculate cover/protect dates for T+1 settlement. At the same time, it isrecommended that firms explore opportunities for a vendor solution where both counterparties can post
the original fails and transform these fails/obligations in automatically generated liabilities.

Activities to Update Internal Processing Systems that Consume Cover/Protect Dates
Activities to Update Internal Processing Systems that Consume Cover/Protect Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to cover/protect date calculations
are included in inventories for configuration
Evaluate the impact on downstream
processes (internal and external) for system2
and process changes related tocover/protect date calculations
Determine responsibility for cover/protect
3 date calculation changes (proprietary vs.
external vendor and service bureau)
4

Coordinate changes with internal andexternal stakeholders

5

Develop internally calculated cover/protect
date test plan

6

Schedule and execute changes related tointernal cover/protect date calculations

4.3.2.D. Adjust Stock Record Platforms as Necessary
Organizations must adjust their stock record platforms as necessary for T+1 settlement.

55

Activities to Adjust Stock Record Platforms as Necessary
Activities to Adjust Stock Record Platforms as Necessary#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to stock record platforms areincluded in inventories for configuration
Evaluate the impact on downstream
processes (internal and external) for system2
and process changes related to modificationof stock record platforms
Determine responsibility for stock record
3 changes (proprietary vs. external vendor andservice bureau)
4

Coordinate stock record changes withinternal and external stakeholders

5

Develop internally calculated stock record
test plan

6

Schedule and execute changes related tomodification of stock record platforms

4.3.3. Corporate Actions Processing Summary
Organizations need to review corporate actions processes for T+1 settlement. This operational area
presents a significant amount of financial and reputational risk for organizations. Vendors and service
bureaus that incorrectly calculate an entitlement or incorrectly announce a cover/protect date could
cause risk (e.g., financial, reputational) to their customer organizations. Incorrect entitlement orcover/protect date processing also may impact external clients (e.g., missing elections to participate involuntary corporate action events, financial loss).
Each event type has activities that should be assessed and potentially executed to be compliant with T+1
settlement. These include ex-date and cover/protect date announcements, for which activities are
discussed in previous sections of the Playbook. The event types included are:• Voluntary Reorganizations• Mandatory Reorganizations• Distributions

56

An overview of the corporate actions processing lifecycle with changes and considerations for the T+1
shortened settlement cycle implementation can be found below:

574.3.4. Dividend Reinvestment Plans
4.3.4.A. Assess Dividend Reinvestment Plans
As the industry transitions to a T+1 settlement environment, organizations will need to assess processes
related to Dividend Reinvestment Plans (DRIPs) to determine which operational processes used to support
DRIPs require enhancements to account for the shortened settlement cycle.
The industry should work with the appropriate regulatory bodies to determine the scope of required
document changes (re-papering). Issuers should review DRIP documents for mention of T+2, which may
need to be amended and re-sent to plan participants.
In-house proprietary DRIPs will need to adjust their procedures to account for the shortened settlement
cycle.

Activities to Assess Dividend Reinvestment Plans
Activities to Assess Dividend Reinvestment Plans#

Implementation Steps

1

Determine required changes for DRIPs
due to T+1 settlement

2

Determine required changes to issuance ofDRIP shares (if open market purchases)

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine required changes to DRIP
3 communications resulting in shortened
settlement cycle
4

Develop test plans for DRIP changes for T+1
settlement

5

Schedule and execute changes prior to T+1
settlement

6

Advise plan participants of changes to DRIP
functionality

58

5 Documentation
5.1

Introduction

The requirements around documentation for the move to T+1 settlement can be organized into threeareas, including external documentation, internal documentation, and customer and staff education:•

External documentation including client-facing documents such as client statements, product sheets,
prospectuses, and agreements, as well as documents informing clients of the new settlement timeline
and changes to an organization’s practices, should be revised for references to the settlement date.
Additionally, external service agreement documentation for utilities, vendors, and service bureaus,such as product sheets, contracts, service level agreements and fee schedules, should be revised forreferences to the settlement date or extensions beyond settlement for subsequent processes.

•

Internal documentation such as written agreements or policies and procedures should be updated toreflect changes to processes and new cut-off times for T+1 settlement. System process
documentation, internal control documentation, operations documentation, and exception handling
documentation should be considered for updates.

•

Customer education and staff training materials should be reviewed and revised for T+1 settlement.
Compliance training, certification programs, and manuals should be reviewed and updated toreference the shortened settlement cycle, and employee awareness documents should be updated
to acknowledge the move to T+1 settlement. Information that appears on an organization’s intranet
and internet websites should also be updated.

The list of documents below is included to assist with an organization’s documentation assessment. The
list is not meant to be comprehensive of potential documents that could be impacted. Organizations
should use this as a framework to perform their own assessment and generate an organization specificlist of documents that need to be updated for T+1 implementation.
Documentation
Reference

Document(s)Internal

External

X

X

5.1.A

10b-10 Confirmations

5.1.B

Balance Restriction Documentation

X

5.1.C

Client Account Opening Documents

X

5.1.D

Client Account Statements and Disclosures

X

5.1.E

Corporate Actions Notifications

X

5.1.F

Custody and Sub-Custody Documents

X

5.1.G

Fund Prospectus and Statements

X

5.1.H

Letter of Transmittal for Voluntary Corporate
ActionsX

T+1 Impact(Yes/No)59

Documentation
Reference

Document(s)Internal

X

5.1.I

Loan Agreements (e.g., Master Securities Loan
Agreement, Master Securities Loan Agreement, andInternational Securities Lending Association (ISLA))

5.1.J

Margin Call Notifications

X

5.1.K

Notices of Execution

5.1.L

Product Issuance Documents for Rights andWarrants

X

5.1.M

Reinvestment Agreements and DRIP Documents

X

5.1.N

Stock Loan Recall Notices

X

5.1.O

Trading Relationship Agreements (e.g., ETFs)

X

5.1.P

CNS ID Net Announcements

X

X

5.1.Q

Subscription Documentation

X

X

5.1.R

Transfer Agent Announcements

X

X

5.1.S

Utility, Vendor, and Service Bureau Product Guides

X

X

5.1.T

Vendor and Service Bureau Contracts and Service
Agreements

X

X

5.1.U

Standard Settlement Instructions

X

X

5.1.V

Accounting Policies

X

5.1.W

Internal Control and Compliance Documentation

X

5.1.X

Operating Procedure Documentation

X

5.1.Y

Trading, Liquidity, and Cash Flow Models

X

5.1.Z

Client Awareness Brochures

X

X

5.1.AB

Customer and Internal T+2 to T+1 Notices

X

X

5.1.ACInternal Training Materials

X

5.1.ADInternet and Intranet Information

X

X

5.1.AE

Qualified Institutional Buyer (QIB) documentation

X

X

5.1.AF

Customer and internal settlement notices

X

X

5.1.AG

New accounts

X

X

X

External

T+1 Impact(Yes/No)X

60

Documentation
Reference

Document(s)Internal

External

5.1.AH

System administrative messages (e.g., CNS ID Net
announcements, Transfer Agent announcements)

X

X

5.1.AI

Client account agreements

X

X

5.1.AJ

Agreement between PB and EB (typically Form 150)

X

X

5.1.AK

Securities loan agreements (e.g., NSKA, Master
Securities Loan Agreement, and ISLA)

X

X

5.1.AL

Trading relationship agreements (e.g., ETFs,
Employee Stock Ownership Plans)

X

X

5.1.A.J

Global Master Repurchase Agreements

X

X

T+1 Impact(Yes/No)

5.2 Timeline and Milestones
The following timeline illustrates the documentation implementation activities and milestones necessary
to meet a May 28, 2024, U.S. T+1 implementation:

5.3 Impact Assessment and Implementation Considerations
The dimensions detailed below should be considered by the indicated participants related to
documentation in a T+1 settlement:
Dimension

Impacted?

Business Model

None

Product Type

Potential
ImpactVendor & Service
Bureau Support

Potential
ImpactDescription
Changes in the documentation are not expected to have alarge impact on organization’s business models.
Impacted products and related services could be
misrepresented to clients if documents that reference in-scopeproducts are not updated for T+1.
Vendors and service bureaus that do not properly update
documentation provided to their customer organizations or61

Dimension

Impacted?

Description
those organization's clients could cause risk (e.g., financial,
reputational, and regulatory) to those organizations.

Trading Venue

Potential
ImpactReferences to the T+2 settlement cycle in the operatingprocedures and internal control documentation will not alignto updated rules of trading venues.

Risk & Compliance

Potential
ImpactRisk (e.g., financial, reputational) and compliance issues
related may occur if documentation is not updated to reflect
the shortened settlement cycle.

Customer Experience

Potential
impactIncorrect documentation may cause reputational damage toan organization and impact clients by potential
misinformation. Potential fines and financial liabilities could
result from client losses on actions that were based on
misinformation from inaccurate documentation. In addition, it
is important to have controls in place for documentation
procedures. E-delivery can help with risk management.

Technology Enablers

Potential
ImpactIssues may occur across an organization's technology
platforms if reference data and systems that populate
documentation are not comprehensively updated for T+1.

The participants impacted table below indicates which industry participants are most likely impacted bydocumentation:

5.3.1. External Documentation
Agreements, official statements, prospectuses, statements of additional information, and subscription
documentation must be updated to accommodate the move to T+1.

5.3.1.A. Update External Client-Facing Documentation
Agreements, official statements, prospectuses, statements of additional information, and subscription
documentation that support the trade processing infrastructure and include references to standard
settlement as T+2 must be updated to reference T+1. Documentation that includes “regular way
settlement” should be considered T+1.
Organizations need to update external client-facing documentation related to trade clearance andsettlement. These external client-facing documents will include client communications with reference toclearance and trade settlement. Particular references are related to when cash or securities will become
free and available, such as product prospectuses, client account statements, account opening documents,
balance restrictions, and other disclosures. In addition, specific agreements, reinvestment documents,
62

valuation documents, or subscriptions that mention the product settlement should also be considered for
updating.
Several indirect products such as mutual funds, and other instruments with underlying securities that are
in scope for T+1 implementation should also have product documentation reviewed for references toregular way settlement, exceptions, valuation, pricing, reinvestments, stock recall processes, and otheractions that may be impacted by the change in settlement.
The list below contains examples of external client-facing documentation that organizations should review
and update:
External Client-Facing Documentation
Reference

Document(s)Internal External

5.3.1.A.1

10b-10 Confirmations

X

5.3.1.A.2

Balance Restriction DocumentationX

5.3.1.A.3

Client Account Opening DocumentsX

5.3.1.A.4

Client Account Statements and Disclosures

X

5.3.1.A.5

Corporate Actions Notifications

X

5.3.1.A.6

Custody and Sub-Custody DocumentsX

5.3.1.A.7

Fund Prospectus and StatementsX

5.3.1.A.8

Letter of Transmittal for Voluntary Corporate
ActionsX

5.3.1.A.9

Loan Agreements (e.g., Master Securities Loan
Agreement, Master Securities Loan Agreement,
and ISLA)

X

X
X

X

Product Issuance Documents for Rights and5.3.1.A.12 WarrantsX

5.3.1.A.13 Reinvestment Agreements and DRIP DocumentsX

5.3.1.A.14 Stock Loan Recall Notices

X

5.3.1.A.15

Trading Relationship Agreements (e.g., ETFs)(Yes/No)X

5.3.1.A.10 Margin Call Notifications
5.3.1.A.11 Notices of Execution

T+1 Impact

X

Activities to Update External Client-Facing Documentation
To update external client-facing documentation, organizations should consider the following activities:

63

Activities to Update External Client-Facing Documentation#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory external client-facing
documentation that references T+2
1
settlement, including electronic documents
and website information
Inventory static data resources used for2 auto-populating documentation thatreferences T+2 settlement
3

Determine which identified documents need
to be updated

4

Create master list of required documentation
changes5

Coordinate documentation changes withinternal and external stakeholders

6

Schedule and execute identified changes todocumentation

Cross-reference updates with master list of
7 required documentation changes to ensure
accuracy and completeness5.3.1.B. Update External Service Agreement Documentation
Organizations need to update external service agreement documentation for T+1 settlement. Vendor andservice bureau documentation will include the bi-lateral contracts between organizations and vendors
and service bureaus, as well as DTCC Fee Guides, Service Guides and Rules. External documents that areprovided and exist outside of the organization also have internal considerations. Similar to the externalclient-facing documentation, organizations should review their external service agreement
documentation for references to a two-day settlement period. Service agreement documentation should
also be reviewed, for the change in delivery terms, to be worded consistently with the shortened
settlement cycle. Documentation that references the two-day period should be updated as necessary.
Agreements may need reauthorization or approval over the changes and other new terms that are
introduced. Organizations should promote the adoption of Standard Settlement Instructions for T+1
settlement.
The types of external service agreement documentation that organizations should update include:64

External Service Agreement Documentation
Reference

Document(s)Internal

External

5.3.1.B.1

DTCC Rules, Service and Fee Guides

XX

5.3.1.B.2

Subscription Documentation

XX

5.3.1.B.3

Transfer Agent Announcements

X

X

X

X

5.3.1.B.4

Utility, Vendor, and Service Bureau Product Guides

5.3.1.B.5

Vendor and Service Bureau Contracts and Service
Agreements

XX

5.3.1.B.6

Vendor and Service Bureau Fee Guides

XX

5.3.1.B.7

Standard Settlement Instructions

X

X

T+1 Impact(Yes/No)

Activities to Update External Service Agreement Documentation
Activities to Update External Service Agreement Documentation#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory vendor and service bureau
documentation that references a two-day
1 settlement period, including agreements,
service descriptions, product guides, andfee schedules
Update external vendor and service
2 bureau documentation for a one-day
settlement
Review, approve, re-negotiate, and re3 authorize changes to documentation asnecessary
Test the execution of updated
4 documentation in the delivery and pricing ofservices

5.3.1.C. Determine Impact of E-Delivery for Client Groups
While the broad scale adoption of e-delivery for documentation will increase efficiency throughout themarketplace, organizations should conduct a documentation assessment to gauge which types of
documents will be required to be electronically delivered to maintain compliance with regulatory65standards in a T+1 settlement. Organizations should perform their own assessment and generate an
inventory of documents that fall under e-delivery for T+1 implementation.
Furthermore, the move to T+1 may necessitate the need for the promotion of broad scale adoption of edelivery as the default receipt method for trade documentation (e.g., trade confirmations, prospectuses)with the option for clients to request paper documentation post-settlement. E-delivery should become
the default standard for delivering transaction documents to customers. In addition, further digitization,such as the basic PDF delivery of confirms and statements, should be encouraged by leveraging technology
for these processes. This change will require the support of regulators to change existing rules regarding
documentation delivery. Such regulatory change will need to address the following key areas:• Support “access equals delivery” as a default for communication to investors (e.g., confirms,
statements, prospectuses, agreements), which would satisfy the “delivery” requirement for securities
documentation.
• Clarification on what constitutes “delivery” for electronic confirmations in accordance with SEC Rule10b-10 under the Exchange Act.
• Adjust the E-Sign Act and remove rule references that trigger the (E-Sign Act) and therefore inhibit
clients from receiving e-delivery of investor documents.

Activities to Determine Impact of E-Delivery for Client Groups
Activities to Determine Impact of E-Delivery for Client Groups#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory vendor and service bureau
documentation that is required to be
1 delivered to clients, including agreements,
service descriptions, product guides, andfee schedules
Determine e-delivery procedures and2 documentation that references T+1
settlement
3

Assess changes required to e-delivery
procedures and documentation

4

Coordinate changes with internal andexternal stakeholders

5 Coordinate changes with client groups
Schedule and execute required changes to
6 identified e-delivery procedures anddocumentation
7

Test the execution of updated e-delivery forclient groups
66

5.3.2.Internal Documentation
Procedure documentation and training materials must be updated to specify T+1 as standard settlement.

5.3.2.A. Adjust Operating Procedures and Internal Control Documentation
Organizations will need to adjust their operating policies and procedures, controls, and internal training
materials for T+1 settlement.
Changes to the documentation should reflect the changes to operations due to the shortened settlement
cycle. Standard operating procedures, internal control documentation, regulatory compliancedocumentation and other documentation of the policies and procedures should be revised as necessary.
Organizations should consider both content and process when reviewing documentation. For example,
prospectus requirements are to deliver the prospectus prior to settlement where applicable, so
procedures will need to be reviewed as well as the content of documentation to be sure that the
information and the delivery reflect T+1 settlement.
Accounting policy documentation based on trade date or settlement date is another area to assess. Policy
documents do not typically mention the days to settlement; however, they do mention settlement dateaccounting. Organizations should review these documents to ensure there are no specific references to
two-day settlement.
The IWG supports e-delivery as the default standard for delivering transaction documents to customers.
In addition, the group supports further digitization, such as the basic PDF delivery of confirms andstatements, in leveraging technology for these processes. This change would require the support ofregulators to change the existing regulations regarding documentation delivery.
Documentation to be included in the consideration of changes necessary to reflect the updated
operations and internal controls include:
Operating Procedures and Internal Control Documentation
Reference

Document(s)Internal

5.3.2.A.1

Accounting Policies

X

5.3.2.A.2

Internal Control and Compliance
Documentation

X

5.3.2.A.3

Operating Procedure Documentation

X

5.3.2.A.4

Trading, Liquidity, and Cash Flow Models

X

External

T+1 Impact(Yes/No)

Activities to Adjust Operations and Internal Control Documentation
Activities to Adjust Operating Procedures and Internal Control Documentation#

Implementation Steps

1

Identify and inventory sources for operatingprocedures and control documentation

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

67

Activities to Adjust Operating Procedures and Internal Control Documentation#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine operating procedures and2 control documentation that references
T+2 settlement
3

Assess changes required to operatingprocedures and control documentation

4

Coordinate changes with internal andexternal stakeholders

Schedule and execute required changes to
5 identified operating procedures and control
documentation
6

Document and track changes todocumentation to ensure completeness5.3.3.Customer and Staff Education
Organizations must educate customers and staff on how the shortened settlement window impacts their
behaviors and related processes.

5.3.3.A. Educate Customers and Staff on T+1 Settlement
Organizations should educate customers and staff on how the shortened settlement window impacts
them, their responsibilities, and related processes. 27 Internal training should be updated to reflect the
new settlement period and operating procedures. Manuals should be reviewed for references to productsettlement. Compliance training, certification, and licensing programs should also be reviewed andupdated as necessary. Vendor-supplied training materials, whether electronic or hardcopy, should be
reviewed for compliance with the new settlement period. Communications and documentation of themove to T+1 should be considered for both internal and external education.
Formal education and communication of the shortened settlement should begin now, as processes
affecting a shortened settlement cycle should be planned months in advance of migration. Educationmaterials could reference the current settlement period and should include precise details sufficient toeducate users on the new settlement cycle.
Customer and Staff Education Documentation

27

Reference

Document(s)5.3.3.A.1

Client Awareness Brochures

SIFMA, ICI, and DTCC will host educational material on their websites.

Internal

External

X

X

T+1 Impact(Yes/No)

68

Customer and Staff Education Documentation
5.3.3.A.2

Customer and Internal T+2 to T+1 Notices

X

5.3.3.A.3

Internal Training Materials

X

5.3.3.A.4

Internet and Intranet Information

X

X
X

Activities to Educate Customers and Staff on T+1 Settlement
Activities to Educate Customers and Staff on T+1 Settlement#
1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Identify customers and staff who require
education related to T+1 implementation

Determine if education materials need to
2 be updated or if new education materials
need to be created
3 Assess changes to staff training materials
4

Assess changes to customer educational
materials

5

Develop a training plan to ensure staff are
adequately trained prior to T+1 conversion

6

Develop a communications plan to address
customer needs

7

Create or update materials for staff andcustomer education

8 Train staff for T+1 implementation
9

Distribute T+1 settlement education material
to customers

5.3.4. Written Agreements or Policies and Procedures
In the SEC’s Final Rule, SEC Rule 15c6-2 will require broker-dealers to either enter into writtenagreements as specified in the rule or establish, maintain, and enforce written policies and procedures
reasonably designed to address certain objectives related to completing allocations, confirmations, andaffirmations as soon as technologically practicable and no later than the end of trade date.

5.3.4.A. Policies and Procedures

69

The Commission modified proposed Rule 15c6-2 to enable a broker-dealer either to (1) enter into
written agreements or (2) establish, maintain, and enforce reasonably designed written policies andprocedures to ensure completion of the allocation, confirmation, affirmation, or any combination
thereof, for a transaction as soon as technologically practicable and no later than the end of the day on
trade date, in such form as necessary to achieve settlement.
Policies and procedures should be reasonably designed to:(b)(1): identify and describe any technology systems, operations, and processes that the broker-dealer
uses to coordinate with other relevant parties, including investment advisers and custodians, to ensurecompletion of the allocation, confirmation, or affirmation process for the transaction.
(b)(2): set target time frames on trade date for completing the allocation, confirmation, and affirmation
for the transaction.
(b)(3): describe the procedures that the broker-dealer will follow to ensure the prompt communicationof trade information, investigate any discrepancies in trade information, and adjust trade information to
help ensure that the allocation, confirmation, and affirmation can be completed by the target timeframes on trade date.
(b)(4): describe how the broker-dealer plans to identify and address delays if another party, including an
investment adviser or a custodian, is not promptly completing the allocation or affirmation for thetransaction, or if the broker-dealer experiences delays in promptly completing the confirmation.
(b)(5): measure, monitor, and document the rates of allocations, confirmations, and affirmations
completed within the target time frames established under [] (b)(2) of the rule, as well as the rates ofallocations, confirmations, and affirmations completed as soon as technologically practicable and nolater than the end of trade date.
Additionally, rule 17Ad-27(a) will require CMSPs to develop policies and procedures focused on
facilitating improvements in their operations, systems, and user obligations to further the developmentof STP in the processing of institutional trades, improve efficiency, facilitate both cost and risk reductionin the clearance and settlement of institutional trades generally, and better accommodate shorter
settlement cycles.

Activities for Written Agreements or Policies and Procedures
Activities for Written Agreements or Policies and Procedures#

Implementation Steps

1

Identify and inventory sources for
written agreements or policies andprocedures

2

Assess the finals rules standards writtenagreements or policies and procedures

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems70

3

Schedule and execute required changes to
identified written agreements or policies
and procedures

4

Document and track changes todocumentation to ensure completeness71

6 Securities Lending
6.1 Introduction
In the current T+2 settlement environment, there is a reliance on batch cycle processes between
custodians and third-party lending agents. In the compressed timeframe of a T+1 settlement cycle, theloaned securities subject to recall by the lender need to be identified in a compressed time frame socustodians’ and agents’ processes can proceed without disruption.
To reduce potential increases in settlement fail rates and potential buy ins resulting from sales of loaned
securities, the industry recommends that lenders adopt a “best practice” of issuing their recalls by 11:59
PM ET on T. However, this deadline does not supersede existing MSLAs. The more notice borrowers haveto return securities, the more likely they will be returned in time for settlement. The change in thesettlement cycle will necessitate behavioral change in lenders, borrowers, custodians, broker dealers, andservice providers, because security lenders will have less time to recall securities on-loan and security
borrowers will have less time to return those securities to settle a sale of loaned securities. Thesebehavioral, technological, and process changes are important to mitigate the impact on settlement
processes resulting from a compressed settlement timeframe. Some lending agents use a batch process
for recalling shares whereas others will recall intra-day. The move to a T+1 settlement cycle can pose achallenge for a custodian who must receive trade instructions in a timely manner in regard to theinstitutional workflows to be able to process their recalls on trade date. Where the lending agent is also
the custodian bank, any securities lending recalls would not begin until after this trade instruction
workflow reaches the custodian. If a third-party lender is involved, this creates a secondary, bifurcatedflow that can be similarly delayed. A third-party lending agent must be separately instructed, andsubsequently must have the shares recalled and back into the custody position at the bank, in order for it
to be delivered in time. 28

6.2 Timeline and Milestones
The following timeline illustrates the additional considerations implementation activities and milestones
necessary to meet a May 28, 2024, implementation:

28

ISITC Board reply to SEC - s70522-20122887-279255.pdf (sec.gov)

72

6.3 Impact Assessment and Implementation Considerations
The dimensions detailed below should be considered by the indicated participants related to securities
lending in a T+1 settlement:
Dimension

Impacted?

Business Model

Potential
ImpactProduct Type

Potential
ImpactVendor & Service
Bureau Support

Potential
ImpactTrading Venue

None

Risk & Compliance

Potential
ImpactCustomerExperience

None

Technology
Enablers

Potential
ImpactDescription
Changes in the securities lending processes are not expected tohave a large impact on an organization’s business model but
should be evaluated.
In-scope products should be evaluated, and processes andsystems should be configured for T+1 settlement to account forvarious product types (e.g., fixed income vs. equities) correctly.
Vendors and service bureaus that do not properly update
securities lending processes and procedures provided to theircustomer organizations could cause risk (e.g., operational,
financial, and reputational) to those organizations. Vendors andservice bureaus should configure systems for T+1 settlement inorder to avoid risk (e.g., financial, reputational, settlement).
Trading venues are not likely to be changed or largely impacted
by securities lending with a T+1 settlement.
Risk (e.g., operational, financial, reputational) and complianceissues (e.g., licensing exams) may occur if securities lending
processes are not updated related to the T+1 settlement cycle.
The IWG determined minimal risk with a move to T+1.
Organizations should perform a risk assessment.
Issues may occur across an organization's technology platforms
if securities lending processes (processes and timing related tostock loan, margin calculation) and procedures are outdated.

The participants impacted table below indicates which industry participants are most likely impacted bydocumentation:

6.3.1. Securities Lending Processes and Procedures
6.3.1.A. Determine Impact on Securities Lending Processes and Procedures
Organizations should review existing securities lending processes and procedures for T+1 settlement.
While the loan and delivery of collateral is virtually and simultaneously accomplished on trade date (T+0),73the shortened settlement and recall cycles, as well as the shortened protect period for voluntary offers,
will require organizations to have a more streamlined process. At the same time, internal books andrecords should be updated to reflect the securities lending and borrowing accurately.

Activities for Determining Impact on Securities Lending Processes and Procedures
Activities for Determining Impact on Securities Lending Processes and Procedures#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory securities lending processes
1 and procedures documentation(completeness check)
Ensure that systems and reference data
2 related to securities lending are included
in inventories for configuration
3

Assess the impact of required changes to
upstream and downstream systems

Determine responsibility for securities
4 lending changes (proprietary vs. externalvendor and service bureau)
5

Coordinate changes with internal andexternal stakeholders

6

Develop exercise and assignment test
plans

7

Schedule and execute system, process,and documentation changes

Review effective controls to prevent
8 issues (e.g., inadvertent data disclosure,client confidential breach)

6.3.2. Stock Loan Recall
The Stock Loan Recall timeline will be impacted due to the move to T+1 settlement.

6.3.2.A. Align to Updated Stock Loan Recall Timing Changes
Under T+1, a lender who sells the loaned securities is incentivized to issue the recall on trade date tominimize risk of fails to deliver and potential resulting buy-ins. The more notice broker-dealers have toreturn securities, the more likely they will be returned in time for settlement. Although the legally binding
recall time will continue to be determined per the securities lending agreement in effect between thelender and the borrower, the industry recommends an 11:59PM ET on T recall cutoff “best practice”.
SIFMA believes this recommendation would provide sufficient time for lender and its agents to complete74

post-trade operational steps necessary to issue recalls and would be reasonably expected to increase therate at which loaned securities are returned on T+1.
The best practice will cause the recall process to work as follows:
The lender issues the recall before 11:59 p.m. ET on T. This should provide sufficient notice toenable the Borrower to attempt to return the loaned securities on T+1 (often by delivering newly
borrowed shares) to timely settle the sale of the loaned securities. However, the legal cutoff time
to return the loaned securities may not occur until a later cutoff time agreed by the lender andborrower under the relevant securities lending agreement (e.g., 3:00PM ET on T+2). The Rule 204
close-out requirement would remain at SD+3 (or T+4).
See below for the T+1 Stock Loan Recall Process timeline:
Activity #Activity Name

Current State Time

Future State Time

3:00PM on T+1 (48hour allowed Buy-In
execution)
1

Stock Loan
Recall Cutoff
After 3:01pm on T+1(72 hour allowed BuyIn execution)

2

DTCC Technical Names & Job
Numbers

11:59PM on T (48 DTC accepts Recall messages
hour allowed Buy- from Vendors and Participants
In execution)and transmits them to thecounterparts through its
SMART/Track for Recalls serviceAfter 12:00AM on Tech Name-SMART/Track for
Recalls
T+1 (48 hour
allowed Buy-In
NSCC’s Security Financing
execution)
Transaction Service (SFT) will also
be changed to accommodate thistiming change for Recalls

3:10PM on T+3

3:10PM on T+2

3:10PM on T+4

3:10 PM on T+3

Buy-InAllocation

Activities to Align to Updated Stock Loan Recall Timing Changes
Activities to Align to Updated Stock Loan Recall Timing Changes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine required changes to stock
1 loan recall processes for migration to T+1
settlement75Activities to Align to Updated Stock Loan Recall Timing Changes#

Implementation Steps

2

Determine responsibility for stock loan recall
timing changes

3

Coordinate changes with internal andexternal stakeholders

4

Develop stock loan recall timing changes test
plan

5

Schedule and execute changes prior to
migration to T+1 settlement

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

6.3.3. Margin Calculations Processes
6.3.3.A. Update Margin Calculations Processes
Organizations will need to review their processes related to margin calculations as the move to T+1 may
require updated processes in a T+1 settlement.

Activities to Update Margin Calculations Processes
Activities to Update Margin Calculation Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to margin calculations areincluded in inventories for configuration
Evaluate the impact on downstream
processes (internal and external) for system2
and process changes related to margin
calculations
3

Determine responsibility for margin
calculation changes

4

Coordinate changes with internal andexternal stakeholders

5 Develop margin calculation test plan
6

Schedule and execute changes related tomargin calculations76

6.3.4. Master Securities Loan Agreement
Borrowers and lenders enter into a master agreement before engaging in securities lending transactions.
The master agreement protects both the parties in case of defaults and includes provisions on collateral,collateral substitution, margin requirements, corporate actions, return of securities and events of default.

6.3.4.A. Updating Master Securities Loan Agreement
Organizations should review existing Master Securities Loan Agreements 29 and adjust as necessary for a
T+1 settlement. SIFMA will review the form MSLA and determine if it requires updating for the T+1
environment.

Activities to Update Master Securities Loan Agreement
Activities to Update Master Securities Loan Agreement#

Implementation Steps

1

Inventory Master Securities Loan
Agreements that reference T+2
settlement

2

Assess changes required to MSLAs

3

Coordinate changes to MSLAs with internaland external stakeholders

4

Schedule and execute identified changes to
MSLAs

5

Document and track changes to MSLAs to
ensure completeness

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

6.3.5. Regulatory Considerations
6.3.5.A. Assess Regulatory Considerations related to Securities Lending
Organizations should assess how securities lending may be impacted by regulatory changes for T+1
settlement.

29
Master Securities Loan Agreement are designed to provide a basic contractual framework for forward and other delayed-delivery
transactions involving mortgage backed and asset-backed securities.

77Activities for Assessing Regulatory Considerations related to Securities Lending
Activities for Assessing Regulatory Considerations related to Securities Lending#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1 Assess rule changes for securities lending
Ensure that systems and reference data
2 impacted by rule changes are included ininventories for configuration
3

Determine process changes required tomaintain compliant with rule changes

4

Coordinate changes with both internal andexternal parties

5 Develop rule change test plans
6

Schedule and execute changes for systemchanges7

Update operational policies and procedures
as applicable for each rule change

8

Update compliance policies and procedures
as applicable for each rule change

9

Update regulatory policies and procedures asapplicable for each rule change78

7 Prime Brokerage
7.1 Introduction
Broker-dealers currently operate under the guidance provided by the SEC “No Action Letter” in which theexecuting broker (“EB”) must deliver trade details to the prime broker (“PB”) by the morning of the next
business day after the trade is executed. No changes have been deemed necessary to the existing NAL in
its current form in order to be compliant with T+1 settlement requirements.
Broker-dealers currently operate under the guidance provided by the SEC “No Action Letter” in which theexecuting broker must deliver trade details to the prime broker by the morning of the next business day
after the trade is executed. This current timing will be sufficient in a T+1 settlement cycle as the industryproposed 9:00PM ET NSCC CNS deadline for trade affirmation and processing. The current disaffirmation
deadline for PBs will remain at 5:00PM ET on T+1 to operationally support a process by which the PB may
disaffirm a previously affirmed trade. 30
Furthermore, PBs, executing/self-clearing broker-dealers, and clearing broker-dealers of an introducing
broker acting as an EB should identify and implement amendments to their existing contracts regarding
the prime brokerage arrangement (e.g., including standardized documents) to reflect any necessarychanges to timing for trade notification and affirmation. No changes have been deemed necessary to Form
150 or Form 151 in their current form in order to be compliant with T+1 settlement requirements. Prime
Brokers, executing/self-clearing broker-dealers, and clearing broker-dealers of an introducing broker
acting as an EB have deemed that Form 150 and Form 151 in their current release would be compliant
with T+1.
In summary, the move to T+1 settlement will necessitate changes to prime brokerage processes in order
to comply with updated regulatory guidance and industry-imposed operational deadlines. To help guideorganizations with implementing the T+1 settlement cycle, implementation activities related to prime
brokerage have been identified below.

7.2 Timeline and Milestones
The following timeline illustrates prime brokerage implementation activities and milestones necessary tomeet a May 28, 2024, implementation:

30

See section 7.3.1.A. to review Prime Broker disaffirmation timeline.

797.3 Impact Assessment and Implementation Considerations
The dimensions detailed below should be considered by the indicated participants related to prime
brokerage in a T+1 settlement:
Dimension

Impacted?

Business Model

None

Product TypeNone

Vendor & Service
Bureau Support

Potential
ImpactTrading Venue

None

Risk & Compliance

CustomerExperience

Technology
Enablers

Potential
ImpactDescription
Changes in the prime brokerage space are not expected tohave an impact on an organization’s business models.
In-scope products should be evaluated to identify potential
impacts as applicable, and processes and systems should be
configured for T+1 settlement to account for various producttypes (e.g., fixed income vs. equities) correctly.
Vendors and service bureaus that do not update prime
brokerage processes and procedures to align with
anticipated, updated regulatory guidance could pose a risk to
the broker-dealer. Vendors and service bureaus should
configure systems and operational procedures to align toregulatory- and industry-imposed operational deadlines andrequirements.
Trading venues are not likely to be changed or largely
impacted related to the operational changes proposed.
Organizations should evaluate how operational changes
related in response to updated regulatory guidance
implicates their overall risk/compliance oversight programs.

Potential
ImpactRequirements by customers or EBs to adhere to modified
service-level agreements (SLAs) or updated procedures
related to onboarding agreements in order to meet modified
regulatory and/or industry-imposed deadlines may be
implicated. Organizations should evaluate how these changes
may impact the customer experience.

Potential
ImpactOperational and technical issues may arise if technology
platforms and related processes are not updated to meet
regulatory- or industry-imposed deadlines (e.g., resolution of
trade mismatches, delivery to CNS within specific timelines,
reduction in straight-through processing).

The participants impacted table below indicates which industry participants are most likely impacted byprime brokerage:80

7.3.1. Review Client Onboarding Documentation and Processing Dependencies
Organizations will need to review processes for prime broker client onboarding documentation andoperational procedures to meet regulatory and industry-imposed deadlines for T+1 settlement in the US.

7.3.1.A. Review Prime Broker Disaffirmation Timelines
DTCC and the T+1 Prime Broker Industry Working Group are proposing to keep the current Prime Broker
Disaffirmation cutoff to operationally support a daily PB disaffirmation cutoff of T+1 at 5:00PM ET toreverse previously affirmed PB trades. This processing change is anticipated to work as follows:• Disaffirmation of trades between 9:00PM ET on T to 1:30PM ET on T+1 would result in reversal
transactions being generated by NSCC for same day settlement. If the original PB transaction isunsettled, the disaffirmed trades will net against the original transaction. If the original PB transaction
is settled, the disaffirmed trades will result in a new NSCC position to be settled. Both scenarios could
impact both the PB and EB’s NSCC intraday margin requirements and could result in intraday margin
calls.
• Disaffirmation of trades between 1:31PM ET on T+1 to 5:00PM ET on T+ 1 would result in reversal
transactions being generated by NSCC for the next business day after settlement (S+1). Similar to above,
if the original PB transaction is unsettled, the disaffirmed trade will net against the original transaction.
If the original PB transaction is settled, the disaffirmed trade will result in new NSCC position to besettled. Both scenarios could impact both the PB and EB S+1 NSCC margin requirement.

Activities to Review Prime Broker Disaffirmation Timelines
Activities to Review Prime Broker Disaffirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to prime broker disaffirmation1
are included in inventories forconfiguration
Examine upstream system, data, andprocess changes to ensure that they do not2interfere with the process for prime broker
disaffirmation
3

Determine changes required to processes
related to prime broker disaffirmation

Coordinate changes to processes related to
4 prime broker disaffirmation with internaland external stakeholders
5

Schedule and execute process changes forprime broker disaffirmation
817.3.1.B. Review Prime Broker Affirmation Timelines
Organizations will need to review processes for Prime Broker affirmation timelines for a T+1 settlementin the US. The timely affirmation of trades by prime brokers is a critical step in the clearing and settlement
process. Trades that are affirmed by 9:00PM ET on T will result in those transaction being sent to NSCC’s
CNS Service if they meet the CNS eligibility criteria. NSCC’s CNS system is a service that provides riskreducing and operational benefits for the industry. NSCC margin requirements shift from the EB to thePrime Broker for affirmed trades that are processed through CNS. It is important that the move to T+1
does not result in a material reduction in the percentage of prime brokerage trades that timely settle
through NSCC’s centralized clearing system. For Prime Brokerage trades the EB and PB will need to submit
their trades to NSCC for CNS clearing prior to the proposed 9:00PM ET on T. Importantly, affirmation isdone via DTCC and not through dual submission by the EB and PB directly to NSCC. This is the affirmation
cutoff time that DTCC and the T+1 IWG have agreed upon.

Activities to Review Prime Broker Affirmation Timelines
Activities to Review Prime Broker Affirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to prime broker affirmation are
included in inventories for configuration
Examine upstream system, data, and process
2 changes to ensure that they do not interferewith the process for prime broker affirmation
3

Determine changes required to processes
related to prime broker affirmation

Coordinate changes to processes related to
4 prime broker affirmation with internal andexternal stakeholders
5

Schedule and execute process changes forprime broker affirmation

7.3.2. Form 151, 151 and the Prime Brokerage No-Action Letter
As part of the work of the SIFMA Prime Brokerage and Securities Lending working group, it has been
agreed that there are no changes required to existing Forms 150 and 151, nor the Prime Brokerage “NoAction Letter” to support the T+1 settlement cycle transition.

82

8 Funding and Liquidity Considerations
8.1 Introduction
Retail investors may be required to have cash in their accounts, or have other contingencies, given timerequired to fund ACH and wire transfers from consumer banks to securities accounts and the investmentof idle cash would be difficult in a T+1 settlement cycle. Given these considerations and to help guideorganizations with implementing the T+1 settlement cycle, implementation activities related to funding
and liquidity changes have been identified below.
Firms should consider how their foreign participants will be able to successfully fund their trading
activity in a T+1 settlement cycle. Investors may find it challenging to execute their FX transactions,submit the transactions into CLS for settlement netting, as applicable, and allocate and affirm trades
prior to industry deadlines. Buy-side firms, in particular, are evaluating various methods to optimize
their FX management 31, however, both buy and sell-side firms should consider their current processes
for FX funding of securities transactions to confirm that they will be able to fund their settlement
obligations without undue increase in counterparty and settlement risk in a T+1 settlement cycle.

8.2 Timeline and Milestones
The following timeline illustrates the additional considerations implementation activities and milestones
necessary to meet a May 28, 2024, implementation:

8.3 Impact Assessment and Implementation Considerations
The dimensions detailed below should be considered by the indicated participants related to funding andliquidity in a T+1 settlement:
Impacted?

Description

Business Model

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Product TypeNone

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Dimension

31“FXPA Buy-side Guidance in Preparation for T+1 Settlement”, November 2023. https://fxpa.org/wp-content/uploads/2023/11/T-1Settlement-Guidance-for-Buy-Side-11-27-23.pdf

83Dimension

Vendor & Service
Bureau Support

Trading Venue

Risk & ComplianceImpacted?

Description

Potential
ImpactVendors and service bureaus that do not properly update
funding, liquidity and collateral management processes andprocedures provided to their customer organizations could
cause risk (e.g., operational, financial, and reputational) to
those organizations. Vendors and service bureaus should
configure systems for funding and collateral management inorder to avoid risk (e.g., financial, reputational, settlement).

None

Potential
ImpactTrading venues are not likely to be changed or largely impacted
by funding and collateral management process with a T+1
settlement.
Risk (e.g., operational, financial, reputational, settlement) andcompliance issues (e.g., licensing exams) may occur if
operational processes are not updated related to the T+1
settlement cycle.

CustomerExperience

Potential
ImpactLiquidity and collateral management issues (e.g., insufficientcollateral, securities lending errors, and missed obligations)
may impact external clients and cause risk (e.g., financial,
reputational).

Technology
Enablers

Potential
ImpactIssues may occur across an organization's technology platforms
if systems and data related to liquidity and collateralmanagement are not comprehensively updated.

The participants impacted table below indicates which industry participants are most likely impacted bychanges related to funding and liquidity:

8.3.1. Liquidity and Collateral Management
T+1 settlement process will enhance liquidity in the financial market as the counterparty risk exposure
decreases.

8.3.1.A. Assess Liquidity and Collateral Management
Organizations need to assess liquidity and collateral management processes for T+1 settlement. The
migration to T+1 is anticipated to reduce counterparty risk and associated market risks. Additionally,
reduced collateral requirements will help reduce liquidity risks, thereby improving capital utilization byorganizations. Despite the anticipated benefits, it is imperative that organizations consider potential
impacts by assessing the operational processes and technology used to facilitate each process.
84For firms using a non-triparty provider and posting equities in USD, there are disconnected workflows
required to move collateral properly. There is a need for more automation in order to settle collateraloutside of non-triparty providers. 32
In order to ease asset allocation and management for collateral purposes, organizations should consider
planning operational changes early in the implementation process to ensure that they are ready forshortened trade matching and affirmation cut-off times. With respect to the substitution and recall
process, return of a requested item of posted credit support should take place the same day that asubstitute credit support is received, particularly when the substitute item uses the same settlement
convention and is in the same country. The International Swaps and Derivatives Association (ISDA)
considers same-day collateral recall a leading industry practice, and this timeframe should continue in theT+1 environment. Regarding liquidity management (and associated treasury functions), treasury
managers will have one day less to ensure the necessary liquidity is present for settling the transactionsof their institutions.
Liquidity and Collateral Management operational strategies should consider the liquidity costs, benefits,
and risks as part of the T+1 migration process. As part of the strategic planning and budgeting processes,
management typically:•

Performs periodic liquidity and profitability evaluations for existing activities and strategies.

•

Identifies primary and contingent funding sources needed to meet daily operations, as well as
seasonal and cyclical cash flow fluctuations.

•

Ensures liquidity management strategies are consistent with the Board’s expressed risk tolerance.

Activities to Assess Liquidity and Collateral Management
Activities to Assess Liquidity and Collateral Management#

Implementation Steps

1

Determine if strategies, policies, or practices tomanage liquidity risk need to change based on
the shortened settlement cycle2

Determine impacts to projection of cash flows

3

Determine if T+1 settlement will impact thecollateral management process4

Determine if changes to collateral management
systems are required due to shortened
settlement cycle

32

ISITC Board reply to SEC - s70522-20122887-279255.pdf (sec.gov)

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems85

8.3.2. FX Considerations and Funding
8.3.2.A. Assess FX Considerations and Funding
Organizations should review their foreign exchange practices for T+1 settlement. Trading platforms mayneed to link their currency exchanges to align with trade settlements. Custodian cut-offs may limit theability of firms to execute FX trades and submit them into netting for settlement, thereby increasing
counterparty and settlement risk. These rules and systemic configuration supporting FX trading,execution, reconciliation, and settlement should be reviewed for purchases of US securities requiring an
exchange of a non-USD currency to ensure good funds are available on settlement date.
For firms using a non-triparty provider and posting equities in USD, there are disconnected workflows
required to move collateral properly. There is a need for more automation in order to settle collateraloutside of non-triparty providers.

Activities to Assess Forex Considerations and Funding
Activities to Assess Forex Considerations and Funding#

Implementation Steps

1

Identify changes to market
synchronization for T+1 settlement cycle

2

Assess impact of market synchronization
changes to foreign exchange and funding

3

Determine changes required due to T+1
implementation

4

Coordinate identified changes with internaland external stakeholders

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

5 Schedule and execute identified changes

8.3.3 Intraday & End of Day DTCC Settlement Processing
8.3.3.A. Assess Intraday & End of Day DTCC Settlement Processing
Organizations should assess their intraday and end of day DTCC settlement processes for T+1
settlement. Intraday and end of day settlement processing is not expected to be largely impacted by theindustry’s move to T+1, firms should conduct their own assessment to ensure alignment with T+1 DTCC
processing timelines.

86Activities to Assess Intraday & End of Day DTCC Settlement Processing
Activities to Assess Intraday & End of Day DTCC Settlement Processing#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to intraday & end of day DTCC
1
settlement processing are included ininventories for configuration
Examine upstream system, data, and processchanges to ensure that they do not interfere
2with intraday & end of day DTCC settlement
processing
3

Determine process changes required for
intraday & end of day DTCC settlement

Coordinate changes to processes related to
4 intraday & end of day DTCC settlement withinternal and external stakeholders
5

Develop test plans for intraday & end of day
DTCC settlement processing

6

Schedule and execute process changes for
Intraday & end of day DTCC settlement879 Additional Considerations
9.1 Introduction
In addition to trade processing, asset servicing, documentation, securities lending, prime brokerage, andfunding and liquidity considerations, organizations should assess other areas, including global
considerations, options exercise and assignment, primary offerings, reconciliations for errors/fails, andbuy-side consideration, for the move to T+1 settlement. To help guide organizations with the T+1
settlement cycle implementation activities be recommendations related to these areas are identified
below.

9.2 Timeline and Milestones
The following timeline illustrates the additional considerations, implementation activities, andmilestones necessary to meet a May 28, 2024, U.S. T+1 implementation:

9.3 Impact Assessment and Implementation Considerations
9.3.1 Global Considerations
The U.S. dollar (USD) FX market is the world’s largest and most liquid financial market. FX market
participants engage in currency exchange transactions across many different jurisdictions and time zones.
It is, therefore, important to consider the implications of the T+1 settlement on the FX markets.
In consideration of the processes related to global settlement implications and FX markets, some global
considerations like FX settlement risk, international banking & market coordination issues, and collateralrisk require attention given the migration to T+1 settlement. Importantly, participants that haveinternational clients, should recognize the new timeline changes, and ensure that they have proper androbust communication and testing framework developed to ensure compliance with the new timeline.

889.3.1.A. Assess Processes for Global Considerations
Organizations will need to work closely with buy-side market participants and international stakeholders
to assess the impact to international investors and the FX market participants when accelerating thesettlement cycle.
Wholesale FX market participants may need to conduct their own analysis related to their internal
operating models and present-day global practices to identify changes and enhancements that would be
required in order to facilitate T+1 FX where needed for U.S. T+1 Settlement.
Organizations will need to review processes for global considerations for T+1 settlement in the US andunderstand how this will affect their relationship with other markets, currencies, and foreign customers.
Foreign Exchange•

Organizations should review their foreign exchange practices, including financial institution partners
outside the U.S., for T+1 settlement. Trading platforms may link their currency exchanges to align withtrade settlements. These rules and systemic configuration should be reviewed for purchases of U.S.
securities requiring an exchange of a non-USD currency to ensure good funds.

Multi-Listed Securities•

Organizations should review their practices (e.g., substitutions, recalls) regarding securities that are
multi-listed. With the U.S. moving to T+1, organizations will need to make adjustments to account formarkets that are in-sync and out of sync with the U.S. settlement cycle. For such securities
considerations and adjustments will have to be made as it relates to margin and entitlements.

•

In addition, organizations should review practices related to dual-listed securities as the U.S.
transitions to T+1. Relevant processes and systemic configuration should be reviewed for thesesecurities to ensure alignment.

American Depositary Receipt (ADR) Underlying Relationships•

ADRs will be impacted across trade processing, asset servicing, documentation, and other areas
similar to U.S. issued equities. Additionally, T+1 will likely impact both sponsored and unsponsoredDRs, and depository banks. The IWG believes that sponsored ADR issuers and unsponsored ADR
participants should review their issuance and cancellation procedures to ensure that changes are
addressed to shorten the settlement cycle.

•

Market makers in these securities, who rely on ADR conversions to cover their delivery obligations,should consider the underlying securities settlement cycle, and analyze how this misalignment will
impact their ability to meet their settlement obligations in a T+1 settlement cycle.

Multi-Currency Security Types•

U.S. securities trade around the globe on different markets and with different security identifiers. The
industry did not identify implementation activities regarding multi-currency securities, as thesesecurities trade based on location and particular market rules.

Global Tax Considerations•

The IWG found that the move to T+1 will likely have a minimal impact to global tax withholding andother global tax considerations. Double taxation agreements will not be affected due to the US
shortening the settlement cycle.
89

Global Market Settlement Cycles
Although the move to T+1 is considered to be a positive change for global settlement harmonization,organizations will still need to assess processes and make adjustments for changes to market
synchronization (newly in-sync and out-of-sync markets). When the U.S. migrated from T+3 to T+2
settlement in 2017, a majority of international markets were already on a T+2 settlement cycle, making
the transition much easier and resolving misalignment issues due to a longer U.S. settlement cycle.
However, the move from T+2 to T+1 now creates a significant misalignment scenario for the U.S., as many
international markets will remain at T+2 with no current announced plans to accelerate the settlement
cycle, HMT Taskforce and AFME have begun their efforts studying the impacts of a T+1 settlement cycle.
Canada and Mexico are accelerating settlement cycles to T+1 on May 27, 2024. 33,34
Many firms process fixed income and option transactions today for foreign clients. With 24 fewer hours
to get foreign activity through the settlement process, however firms will need to carefully review theircurrent T+1 processes to ensure they can accommodate the increased capacity needs.

Dimensions to Review Processes for Global Considerations
The dimensions detailed below should be considered for global considerations:
Dimension

Impacted?

Business Model

Potential
ImpactProduct Type

Potential
ImpactSummary of Risk
Due to the shortened settlement cycle, coordinated efforts
need to be taken by wholesale FX market participants tointroduce T+1 settlement without disruption, particularly for
non-U.S. based investors given time zone differences.
Global considerations could experience operational andsettlement issues if trade discrepancies occur on T+1 andglobal parties are unable to pre-fund the trade.

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus that do not properly updateprocesses for global market participants and data provided totheir customer organizations could cause risk (e.g., financial,
reputational) to those organizations.

Trading Venue

Potential
ImpactInability to pre-fund the trade by foreign investors may deter
them to trade in U.S. financial markets.

Risk & Compliance

Potential
ImpactRisk (e.g., operational, financial, and reputational) andcompliance issues may occur if processes related to global
considerations are not properly configured for T+1.

Potential
ImpactIncorrectly updated global market processes may cause
upstream and downstream implications for internal functions(e.g., reconciliation, deliveries) and impact external clients(e.g., failed trades).

Customer Experience

33
CCMA Announces Canadian T+1 Start Date: Monday, May 27, 2024, https://ccma-acmc.ca/en/wp-content/uploads/CCMA-AnnouncesCanadian-T1-Start-Date-March-14-2023.pdf
34
CCV Announcement to Market Participants – Adoption of T+1 Settlement, https://www.contrapartecentral.com.mx/wb3/wb/CCV/archivos_publicos/_vtp/CCV/118d_2023/_rid/151/_mto/3/CCV_y_AMIB_T1_Anuncio_Ingle769s_Version_FInal.p
df?repfop=view&reptp=118d_2023&repfiddoc=712&repinline=true

90Dimension

Impacted?

Technology Enablers

Potential
ImpactSummary of Risk
Issues may occur across an organization's technology
platforms if systems and data related to global markets are notcomprehensively updated.

The participants impacted table below indicates which industry participants are most likely impacted by
global considerations:

Activities to Review Processes for Global Considerations
Activities to Review Processes for Global Considerations#

1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Identify changes to market synchronization
for T+1 settlement cycle

Assess impact of market synchronization
changes to foreign exchange, foreign
2 investment, and cross-border transaction
processing, procedures, and policy
documentation
3

Review issuance and cancellation procedures
around ADR processing

4

Determine changes required due to T+1
implementation

5

Coordinate identified changes with internal andexternal stakeholders

6 Schedule and execute identified changes

9.3.2 Options Exercise and Assignment
Listed Options currently settle on a T+1 basis but the industry together needs to reengineer securities
processing functions to further facilitate the exercise and assignment processes of options on a T+1 basis.

91

9.3.2.A. Assess Options Exercise and Assignment Processes
Organizations should assess their options exercise and assignment processes for T+1 settlement. The
exercise and assignment of options are expected to move to T+1 to align with the settlement of theunderlying securities.

Dimensions to Assess Options Exercise and Assignment Processes
The dimensions detailed below should be considered for options exercise and assignment processassessment:
Dimension
Impacted?
Summary of Risk
The IWG determined no or minimal risk. Organizations should
Business ModelNone
perform a risk assessment.
Potential
ImpactUnderlying securities could experience operational andsettlement issues if settlement dates are not adjusted for T+1.

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus that do not properly update
options exercise and assignment operations and data provided
to their customer organizations could cause risk (e.g., financial,
reputational) to those organizations.

Trading Venue

Potential
ImpactOptions exercise and assignment processes that are notproperly updated for T+1 settlement could cause balanceissues with the Options Clearing Corporation (OCC).

Risk & Compliance

Potential
ImpactRisk (e.g., operational, financial, and reputational) andcompliance issues may occur if options exercise andassignment processes are not properly configured for T+1.

Potential
ImpactIncorrectly updated options exercise and assignment
processes may cause upstream and downstream implications
for internal functions (e.g., reconciliation, deliveries) and
impact external clients (e.g., failed trades).

Potential
ImpactIssues may occur across an organization's technology
platforms if options exercise and assignment processes andoptions settlement data configuration are notcomprehensively updated.

Product Type

Customer Experience

Technology Enablers

The participants impacted table below indicates which industry participants are most likely impacted by
options exercise and assignment:

92

Activities to Assess Options Exercise and Assignment Processes
Activities to Assess Options Exercise and Assignment Processes#

Implementation Steps

1

Inventory exercise and assignment processes
and documentation (completeness check)

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to options exercise and assignment2
are included in inventories forconfiguration
3

Assess the impact of required changes to
upstream and downstream systems

Determine responsibility for exercise and4 assignment changes (proprietary vs. externalvendor and service bureau)
5

Coordinate changes with internal and external
stakeholders

6 Develop exercise and assignment test plans
7

Schedule and execute system, process, anddocumentation changes

9.3.3 Primary Offerings
9.3.3.A. Assess Primary Offerings
Organizations will need to consider changes to its primary offerings processes. Ancillary securities
processing activity related to secondary market trading will require reengineering to execute contracts
and allocations across asset classes under compressed timeframes. Often, these processes span multiple
trading days given their nuances and the legal and contractual obligations may not, and in the case of
primary offerings cannot be satisfied within the trading day window for end-of-day settlement.

Dimensions to Assess Primary Offerings
The dimensions below should be considered for primary offerings:
Dimension

Impacted?

Business Model

Potential
ImpactSummary of Risk
Primary equity offerings are document intensive. Usually, thedelivery of final prospectuses and various other documents inthe current T+2 cycle occurs on the morning of settlement. The
final prospectus is unlikely to be delivered prior to thesettlement of the T+1 offering. Consolidated efforts need to be93

Dimension

Impacted?

Summary of Risk
made to the model to accommodate for unanticipateddocumentation issues for a smooth transition to T+1.

Product Type

Potential
ImpactPrimary offering process could experience operational andsettlement issues if current documentation and exception
management processes are not adjusted for T+1.

Vendor & Service
Bureau Support

Potential
ImpactServices that fail to accommodate any documentation
exceptions of primary offerings seamlessly will lead to hiccups
in the settlement cycle

Trading Venue

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Potential
ImpactOperational risks are heightened due to a compressed
timeframe that provides virtually no time to addressunanticipated issues that may arise in primary offerings.

Customer Experience

Potential
ImpactAny unanticipated delays in documentation and inability offoreign banks to pre-fund the nominal amount/par value (inlocal currency) to the company in order for the company tothen register the share capital increase with the local registerwould cause inconvenience for foreign investors.

Technology Enablers

Potential
ImpactIssues may occur across an organization's technology
platforms if systems and data related to primary offerings are
not comprehensively updated.

Risk & Compliance

The participants impacted table below indicates which industry participants are most likely impacted byprimary offerings:

Activities to Assess Primary Offerings
Activities to Assess Primary Offerings#

Implementation Steps

1

Determine required changes for primaryofferings required for migration to T+1

2

Accelerate documentation procedures
required to close primary offerings

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

94

Activities to Assess Primary Offerings#

Implementation Steps3

Coordinate changes with internal andexternal stakeholders

4

Develop test plans to check the robustness ofthe system in handling operational issues

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute new systems for
5 primary offerings to cater to the newcompressed timeframe of T+1

9.3.4 Reconciliations for Errors/Fails
Organizations will need to consider changes to its processes for settlement errors/fails for T+1 settlementin the U.S. the common causes of settlement errors are missing trade counterparty instructions, missing
or incorrect SSIs, shares not received from a recalled loan or pledged security, cancels and rebills, firm
communications, and conversions/realignments as applicable to RegS/144A and ADR/ORD securities.
Based on AccessFintech’s analysis of today’s markets, 60% of trade fails are caused by inventory issues.
This is coupled with 15% of trade fails from SSI related issues, 15% from PSET conflicts, and 10% foreconomic reasons. In the transition to T+1, there is potential to collaborate, both internally and with
relevant counterparties, to address these root causes.
Missing trade counterparty instructions•

Stale reference data not updated with current SSI instructions results in incomplete or inaccurate
reference data being utilized for trade matching.

•

For block trades, counterparties may not distribute and or receive the allocation information in atimely manner.

Missing or incorrect SSIs•

Due to non-standard processes for obtaining SSIs, there may exist missing or incorrect SSIs.

•

Root causes of fails likely to interrupt various streams of revenue data for pricing.
- Customers failing to update SSIs on automated systems- Customers trading in a block account and allocating securities with one set of SSIs and then making
changes to another account shortly before settlement- Firms awaiting trade instructions from the counterparty on a transaction for an illiquid security

Shares not received from a recalled loan or pledged security•

Processing timelines will be compressed in a T+1 settlement cycle. If the recall process is delayed forany reason, the ability to obtain the shares back may lead to a higher percentage of trade fails.

•

Given the compressed processing timelines in a T+1 environment, a delay in the request to releasepledged securities may lead to a higher percentage of trade fails.
95

Cancels and rebills•

The cancel and rebill process occur when a trade is booked, affirmed, and then canceled. This cancel
can lead to increased errors and potential DK’s. 35 Considering these instances occur frequently in a
T+2 settlement cycle, it is believed that these occurrences could become more prevalent in a T+1
settlement environment. Firms should look to install best practices and automation of the cancel andrebill process to avoid failure scenarios.

•

The industry lacks a standardized method and process to effectively and timely manage cancel andrebills which creates inconsistencies between firms and is a driver of settlement errors andsubsequent fails. The current cancel and rebill process can lead to an increase in DTC Participantssending Payment Orders (SPOs) through DTC to resolve these money differences.

Firm communications•

Many firms continue to rely on outdated communication methods (e.g., emails, faxes) to complete
trade settlement and reconciliations. These inefficient communication channels contribute to errors
and delay trade settlement.

Conversions/realignments as applicable to RegS/144A and ADR/ORD securities•

In order to enable T+1 settlement without increasing fails, the industry believes there needs to be
automated solutions to the manual paperwork and physical stamp requirements to process Reg
S/144a conversions with the conversion agent community. In the current state, the ability to convert
securities ahead of standard settlement cycles to ensure timely settlement is already strained leading
to increased fails, counterparty risk and financial exposure. We believe that in a T+1 environment, thisrisk will be further strained as the current process is not fit for purpose. An industry solution would
greatly benefit settlement efficiency and will improve liquidity in the marketplace on these securities.

Based on discussions held to-date, the IWG recommends the following:•

Adopt full utilization of available technology.

•

Propose standardization of processes and further adoption of widely available automated systems
and solutions.
- In the cancel and rebill process, this will allow for industry participants to agree to pair-offs, partials,
and other trade details in a quicker manner which will be required to avoid fails in an accelerated
settlement cycle

9.3.4.A. Assess Reconciliation Processes for Errors/Fails
Organizations should review their asset reconciliation processes for errors and fails. Standardization of
protocols and processes would be beneficial to manage the errors and fails of trades without hindering
the transition to T+1.
Communication channels also needs to be assessed and redundant flows should be integrated for asmoother transmission of information.

Dimensions to Assess Reconciliation Processes for Errors/Fails
The dimensions below should be considered to reconcile errors/fails:
35

A DK’d trade results when one of the parties has a dispute or rejects the trade due to a given discrepancy.

96

Dimension

Impacted?

Summary of Risk
With the compressed timeline, manual processes should be
automated so that the settlement instruction delivered tocustodians by brokers are error-free and should eliminate
discrepancies between buyer and seller.

Business Model

Potential
ImpactProduct Type

Potential
ImpactProcesses should be standardized and automated to mitigate
risks pertaining to data quality and integration with trade
processes.

Vendor & Service
Bureau Support

Potential
ImpactVendors can offer robust exception management services to
identify and handle errors and fails in the accelerated
settlement cycle.

Trading Venue

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Risk & Compliance

Potential
ImpactFailure to handle SSI mismatches and standardizing cancelling
and rebilling of trades would create compliance issues andincrease the quantum of failed trades.

Customer Experience

Potential
ImpactReliance on legacy systems can deter the process of timely
allocation of trades for customers.

Technology Enablers

Potential
ImpactInability of customers to update their SSI on automatedsystems or updating instructions just before the settlement in
the system would risk the data quality and integrity.

The participants impacted table below indicates which industry participants are most likely impacted byreconciliation processes for errors and fails:

Activities to Assess Reconciliation Processes for Errors/Fails
Activities to Assess Reconciliation Processes for Errors/Fails#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine the redundant manual
1 touchpoints and illiquid securities in thecurrent system
2

Automate the processes and streamline
communication channels
97

Activities to Assess Reconciliation Processes for Errors/Fails#
3

Organization Participants

Implementation Steps(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure seamless flow of trade instruction
from one counterparty to another4 Coordinate changes amongst all stakeholders
5 Test the new systems in place
6 Schedule and execute system changes

9.3.5 Buy-Side Considerations
To accelerate the settlement cycle, the SEC has made amendments to the recordkeeping rule for buy-side
participants such as investment advisers. Registered investment advisers will be required to make andkeep records of the allocations, confirmations, and affirmations for securities transactions subject to therequirements of Rule 15c6-2(a).
The current rule requires registered investment advisors to maintain records of all written communication
related to placing and executing any order to purchasing and selling of any security. The change in therule will further extend this requirement to retaining allocation, confirmation, and affirmation
information.
Buy -side firms should begin analyzing which processes are manual or have multiple touchpoints. Post thisanalysis, firms will likely identify the need for new technology that can be implemented to automate suchprocesses. Buy-side firms will need to assess the impact to determine the appropriate steps to comply
with the final rule.
Buy-side firms should not underestimate the importance of having STP standards and practices in place
to meet same-day affirmation to ensure timely settlement on T+1.
The dimensions below should be considered for buy-side considerations:
Dimension

Impacted?

Summary of Risk

Business Model

Potential
ImpactFinal rule shifts the recordkeeping and record retention
obligation to the investment managers to keep records of all
steps of allocation, affirmation, and confirmation.

Product Type

Potential
ImpactBuy side participants will have to identify processes andcontrols that can be automated and updated for them toremain effective.

Vendor & Service
Bureau Support

Potential
ImpactServices that fail to properly record and retain information
about trade allocation, affirmation, and confirmation as per
the proposed change under T+1 could cause inconvenience forcustomers’ trades. T+1 will require documentation language

98Dimension

Trading Venue

Impacted?

Summary of Risk
updates that will impact resourcing and delivery processes(including the associated technology vendors) for buy-side.

None

Minimal to no risk has been identified for trading venue.

Potential
ImpactGovernance and escalation frameworks need to be in place toensure compliance to the new final rule. Having a bespoke
program in place to understand how best changes in the newaccelerated cycle can be incorporated will be key.

Customer Experience

Potential
Impact

The failure to comply with the new proposed changes ofrecord keeping and retention by buy-side firms may impact the
timely allocation, affirmation, and confirmation of trades of
the customer.

Technology Enablers

Potential
ImpactFirms should look for technology solutions that can assist themto get to T+1 by analyzing their internal processes to adhere to
the new timeline changes in the settlement cycle.

Risk & Compliance

The participants impacted table below indicates which industry participants are most likely impacted bybuy-side considerations:9.3.5.A. Assess Buy-Side Considerations
Organizations should assess their existing systems and look out for opportunities for automation ofprocesses.

Activities to Assess Buy-Side Considerations
Activities to Assess Buy-Side Considerations#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Revisit the internal processes, begin impact
1 analysis, and look for investment
opportunities that can accelerate change
2

Identify processes that can be automated andcontrols that need to be updated

Update systems to incorporate new
3 recordkeeping changes related to trade
allocation, affirmation, and confirmation
99

Activities to Assess Buy-Side Considerations#

Implementation Steps

4

Schedule and execute system, process, anddocumentation changes

5

Test the processes and assess to solve
outstanding issues

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

9.4.6 Additional Recommendations and Considerations
9.3.6.A. Automation Considerations
While many firms have invested in communication protocols and standards that enable STP, there is asignificant population of managers and clients where automation investment is limited to non-STP
solutions (e.g., creation of automated emails, PDF documents via email) which essentially mimic FAX
processes.
In addition, matching through CTM is not a flawless process. Higher volumes of trades typically result in
an increase in errors that require manual intervention. Furthermore, technical issues regarding
connectivity to CTM are not uncommon, delaying a broker or manager in sending matching instructions. 36
Given the above issues, organization should evaluate their current processes (e.g., CTM processes) andreview where automation has been applied and confirm its suitability and efficacy in reducing manual
touchpoints across the trade lifecycle.

36

ISITC Board reply to SEC - s70522-20122887-279255.pdf (sec.gov)

100

10 Regulatory Changes
10.1 Introduction
On February 15th, 2023, the Securities and Exchange Commission released the Final Rule to shorten thestandard settlement cycle for most broker-dealer transactions from two business days after the tradedate (“T+2”) to one business day after the trade date (“T+1”).

10.2 Timeline and milestones
The following timeline illustrates the projected regulatory change activities and milestones necessary tomeet a May 28, 2024, T+1 implementation:

10.3 Impact Assessment and Implementation Considerations
Organizations need to assess rule changes and regulatory reporting for T+1 settlement. The dimensions
detailed below should be considered for regulatory assessment:
Dimension
Business Model

Impacted?
None

Summary of Risk
The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Product Type

Potential
ImpactVarious product types (e.g., equities, fixed income, mutual
funds, and derivatives) should be reviewed to ensure thatsystems and data linked to these product types support
upstream and downstream changes for the shortened
settlement period.

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus that do not properly apply rulechanges could cause risk (e.g., operational, financial, andreputational) to their customer organizations.

Trading Venue

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Potential
ImpactRisk (e.g., operational, financial, and reputational) andcompliance issues may occur if rule changes are not properly
applied for T+1 settlement.

Risk & Compliance101Dimension
CustomerExperience

Technology Enablers

Impacted?
Potential
ImpactPotential
ImpactSummary of Risk
Incorrectly applied rule changes may impact external clients(e.g., failed trades) and cause risk (e.g., operational, financial,
and reputational).
Issues may occur across an organization's technology
platforms if rule changes are not comprehensively applied,potentially resulting in risk (e.g., operational, financial, andreputational).

The participants impacted table below indicates which industry participants are most likely impacted byregulatory changes:

10.3.1 Regulatory changes
10.3.1.A. Assess Rule Changes and Regulatory Reporting
The Securities and Exchange Commission (“Commission”) released its Final Rule 37 to shorten the standard
settlement cycle for most broker-dealer transactions from two business days after the trade date (“T+2”)
to one business day after the trade date (“T+1”). As part of the rule release, the Commission included,inter alia, the following key rule changes:

37•

15c6-1(a): change standard settlement for most securities transactions from two business days
after trade date (T+2) to one T+1.

•

15c6-1(b): codify an exclusion of security-based swaps from the requirements of 15c6-1(a).

•15c6-1(c): shorten the separate standard settlement cycle for firm commitment offerings priced
after 4:30 p.m. from four business days after trade date (T+4) to T+2.

•

15c6-1(d): Retain the ability for underwriters and parties to agree in advance of a transaction toa settlement cycle other than the standard settlement cycle.

•

15c6-2: Require a broker-dealer to either enter into written agreements as specified in the ruleor establish, maintain, and enforce written policies and procedures reasonably designed toaddress certain objectives related to completing allocations, confirmations, and affirmations assoon as technologically practicable and no later than the end of trade date.

•

17 CFR 275.204-2: Require registered investment advisers to make and keep records of theallocations, confirmations, and affirmations for securities transactions subject to therequirements of Rule 15c6-2(a)•17 CFR 240.17Ad-27: require clearing agencies that provide a central matching service (“CMSPs”)
to establish, implement, maintain, and enforce policies and procedures reasonably designed to

Final Rule102

facilitate straight-through processing (“STP”) and to file an annual report regarding progress withrespect to STP.
•

17 CFR Part 232 (“Regulation S-T”): Require that a CMSP submit the annual report required byRule 17Ad-27 using the Commission’s EDGAR system and tag the information in the report using
the structured XBRL.

Coordinated regulatory support, along with the in-depth preparation of market participants, will ensure
a carefully executed migration without market disruptions or harmful impacts to investors. While thefollowing is not an exhaustive list, the below rules are expected to change for T+1 implementation:
Rules that Specifically
Reference T+2 38
Regulation

Description

SEC Rule 15c6-1(a)A broker or dealer shall not affect or enter into a contract for the purchase orsale of a security that provides for payment of funds and delivery of securities
later than the second business day after the date of the contract, subject tocertain exceptions

SEC Rule 15c6-1(c)

SEC Rule 15c6-1(a) shall not apply to contracts for the sale for cash of securities
that are priced after 4:30PM ET on the date such securities are priced and thatare sold by an issuer to an underwriter pursuant to a firm commitment
underwritten offering registered under the Securities Act of 1933 or sold to an
initial purchaser by a broker-dealer participating in such offering provided that a
broker or dealer shall not effect or enter into a contract for the purchase or saleof such securities that provide for payment of funds and delivery of securities
later than the fourth business day after the date of the contract unless otherwise
expressly agreed to by the parties at the time of the transaction

MSRB Rule G12(b)(ii)(B), G15(b)(ii)(B)

Settlement dates shall be as follows: (B) for "regular way" transactions, thesecond business day following the trade date

MSRB Rule G32(a)(i) et. al.

“No broker, dealer or municipal securities dealer shall sell any offered municipal
securities to a customer unless such broker, dealer or municipal securities deliverdelivers to the customer by no later than the settlement of the transaction a
copy of the official statement”

38

The list is not meant to be comprehensive of all rules that reference T+2.

103

Rules that Specifically
Reference T+2 38
Regulation

Description

FINRA Rule
11320(b) 39

In connection with a transaction “regular way,” delivery shall be made at theoffice of the purchaser on, but not before, the second business day following thedate of the transaction

NYSE Rule 64(a)Bids and offers in securities of the United States Government admitted todealings on an "issued" basis shall be made only as the "regular way" for that
security i.e., for delivery on the business day following the day of the trade

NASDAQ Rule
11320(b),11140(b)(1),
Done11150(a)In connection with a transaction "regular way," delivery shall be made at theoffice of the purchaser on, but not before, the second business day following thedate of the transaction

OCC Regulation,
Part 12.9(a)All contracts effected or entered into by a national bank for the purchase or saleof a security shall provide for completion of the transaction within the number ofbusiness days in the standard settlement cycle followed by registered broker
dealers in the United States

FDIC Rules andRegulations, Part
344.7(a)All contracts effected or entered into by an FDIC-supervised institution thatprovides for the purchase or sale of a security shall provide for completion of thetransaction within the number of business days in the standard settlement cycle

FINRA Rule11860(a)(4),11140(b)(1),11150(a) 40

No member shall accept an order from a customer pursuant to an arrangement
whereby payment for securities purchased or delivery of securities sold is to bemade to or by an agent of the customer unless a certain set of procedures arefollowed

Transactions in stocks except those made for "cash" as prescribed in Rule 14,
NYSE Rule 235, 236 shall be ex-dividend or ex-rights on the second business day preceding the record
date fixed by the corporation or the date of the closing of transfer books

39

FINRA published its rule changes to conform to exchange act Rules 15c6-1 and 15c6-2 to Shorten the Standard Settlement Cycle for Most
Broker-Dealer Transactions; SR-FINRA-2023-017 | FINRA.org
40
FINRA published its rule changes to conform to exchange act Rules 15c6-1 and 15c6-2 to Shorten the Standard Settlement Cycle for Most
Broker-Dealer Transactions; SR-FINRA-2023-017 | FINRA.org

104

Rules that Specifically
Reference T+2 38
Regulation

Description

MSRB G-12(b)(ii)(C),
Outlines uniform practices for the processing and settlement of municipal(D), G-15(b)(ii)(C)securities

SEC 1994 Prime
Brokerage
No Action Letter

Principally, describes the prime brokerage arrangement, confirms that securities
trades executed by a customer with an EB for give-up to a prime broker does not
violate the “free-rider” rule in Regulation T, as well as setting forth the division of
responsibilities, rights, and obligations among a prime broker, an EB, and theirmutual customer

SEC Rule 10b-10(Confirmationdeliveryrequirements)

Requires broker-dealers to send customers a written confirmation on or before
the completion of a transaction

Reg SHO

Rules establish order marking, "locate" and "close-out" requirements aimed atcurtailing naked short selling and other abusive practices

Federal Reserve
Board Regulation T

Governs cash accounts, as well as the amount of credit that broker-dealers can
extend to investors for the purchase of securities

SEC Rule 15c3-3(Customer
Protection)

The rule dictates the amount of cash and securities that broker-dealer firms mustsegregate in specially protected accounts on behalf of their clients

SEC Rule 15c2-8(b)Requires such broker or dealer to “deliver a copy of the preliminary prospectus
to any person who is expected to receive a confirmation of sale at least 48 hours
prior to the sending of such confirmation.”

The Municipal Securities Rulemaking Board (MSRB) received approval from the U.S. Securities andExchange Commission (SEC or “Commission”) on May 25, 2023, for amendments to MSRB Rules G-12,
105

on Uniform Practice, and G-15, on Confirmation, Clearance, Settlement and Other Uniform Practice
Requirements with Respect to Transactions with Customers, to shorten the settlement cycle from thecurrent trade date plus two days (T+2) to trade date plus one day (T+1). 41
In addition, DTCC will have to make changes to its Rules and Service Guides to accommodate the moveto a T+1 Settlement Cycle.

41
MSRB Rules G-12 and G-15 to Define Regular-Way Settlement for Municipal Securities Transactions,
https://www.msrb.org/sites/default/files/2023-05/2023-06.pdf

106

11 Testing and Migration
11.1 Introduction
Organizations will need to develop and execute test plans that align with a U.S. T+1 migration date of May
28, 2024. Testing will need to be performed iteratively throughout implementation to achieve readinessfor the migration to T+1. Testing should include internal system testing, vendor and service bureau
integration testing, and industry testing to be completed with DTCC.
Organizations should develop test plans for the following areas:•

Testing of the changes implemented to meet requirements for a T+1 settlement cycle•

Regression testing to verify continuity of upstream or downstream functions•

Integration testing with Exchanges, vendors, and service bureaus•

Participation in industry testing

11.2

Timeline and Milestones

The following timeline shows internal testing, industry testing, and migration activities and milestones
necessary to meet a May 28, 2024, U.S. T+1 implementation:

11.3 Impact Assessment and Implementation Considerations
The dimensions detailed below should be considered related testing and migration in a T+1 settlement:
Dimension

Impacted?

Business Model

None

Product Type

Potential
ImpactSummary of Risk
The IWG determined no or minimal risk. Organizations should
perform a risk assessment.
Trades involving various securities could process incorrectly or
fail if testing is not comprehensive across product types.

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus that do not properly test
systems, data, and processes provided to their customer
organizations could cause risk (e.g., operational, financial, andreputational) to those organizations.

Trading Venue

Potential
Impact

Test plans will need to be developed for each trading venue
included in industry testing.
107

Dimension

Impacted?

Summary of Risk
Risk (e.g., operational, financial, and reputational) andcompliance issues may occur if systems, data, and processes
are not included in test plans and testing is not fully executedfor T+1 settlement.

Risk & Compliance

Potential
ImpactCustomer Experience

Potential
ImpactInsufficient testing may cause upstream and downstream
implications for internal functions and impact externalcustomers.

Technology Enablers

Potential
ImpactIncomplete testing of an organization's technology platforms
may lead to operational issues across internal functions and an
inability to implement the shortened settlement lifecycle.

The participants impacted table below indicates which industry participants are most likely impacted by
testing and migration plans:

11.3.1 Develop Internal and Industry Test Plans
11.3.1.A. Internal Testing
Individual organizations will need to develop test plans for both internal and industry testing.
Organizations should review applicable scenarios for production and validation. While developing internal
test plans, organizations should consider the impact of the implementation changes, the creation ofrepresentative test data, and the scheduling of testing to be prepared to participate in industry testing.
Test data volumes should also be considered for double settlement and bank holidays. The IWG suggested
reviewing settlement volumes from existing industry double settlement and bank holiday dates as abaseline estimate.
Internal testing should occur in 2023 for individual organizations as they prepare for T+1 implementation.
Testing should include people, processes, asset classes and technology impacted by the shortened
settlement cycle, for example:•

Internal system and data changes•

Internal process adjustments•

Operating procedures and documentation updates•

Regression testing on upstream and downstream systems, data, and processes•

Vendor and service bureau changes affecting the organization•

Stress testing using the double settlement day volume•

Corporate action expiration and cover/protect date processing (guarantee of delivery)108

11.3.1.B. Industry Testing
DTCC and the industry will plan and coordinate industry testing for DTCC services that will be impactedwith a move to a T+1 settlement cycle. DTCC’s high-level and detailed testing plans 42 have been distributed
to the industry. DTCC is offering its T+1 test environment beginning August 14, 2023, through May 31,
2024, to allow participant to conduct end-to-end testing. Additionally, scripted tests are planned to test
various processing scenarios.
It is expected that most DTCC participants will take part in industry testing. DTCC does not plan to mandate
testing but is highly recommending that the industry complete testing will enable them to be ready tosupport a T+1 settlement cycle. In addition to the industry testing to be coordinated by DTCC, otherexternal testing may also need to occur within organizations that settle certain trades outside of the DTCC
services.
Various components that the industry test plan includes:•

Timelines•

Environments•

Utilities•

Exchanges to allow full end-to-end testing- ITP test environment with trade validations to feed NSCC and DTC- NSCC clearing services from UTC through to CNS- DTC processing with revised schedules and cut-off times•

Test data requirements and provisions- Mock counterparties for executions (or coordinated matches to be determined)- DTCC will assign specific CUSIPs to create various scripted test conditions, (e.g., corporate actions) CNS and non-CNS eligible CUSIPs (multilateral guaranteed, bilateral, trade for trade) DTC will establish certain CUSIPs with security position to enable transactions tosettle and some CUSIPs with no position to allow transactions to drop
- Corporate action scripted test conditions will be created to enable market participants to test
various corporate action scenarios
 “Regular way” ex-date and “irregular way” ex-date changes
 Cover/protect date changes•

NSCC will define regular way settlement as T+1 for the following products:- Equity trades into the UTC process- Corporate bonds, municipal bonds, and UITs into the CMU RTTM process- ETF Create and Redeem processes•

Success criteria•

Readiness requirements- Industry testing will not be mandated; but it is highly recommended that firms test all impacted
processes that are needed to move to a T+1 settlement cycle

42

UST1 Detailed Test Document

109

- This includes vendors and service bureaus•

DTCC will utilize its existing test environment for T+1 industry testing. This test environment will
support all NSCC, DTC and ITP T+1 industry testing requirements•

Given the duration of the T+1 test and the scope of the T+1 changes, DTCC will establish a second T+2
test environment, to operate in parallel with the T+1 test environment. To minimize the work required
for members to connect to a new DTCC test environment, the existing DTCC environment will be
modified to support T+1 testing. Only members looking to test functionality in a T+2 environment
during the T+1 testing period will need to connect to the new DTCC T+2 test environment

11.3.1.C. Testing Dimensions
Organizations will need to take a holistic view of testing in additional to Internal and Industry testing. It
is recommended that firms consider the following testing:
•
•
•
•
•

Functional testing: Testing accounting for functional changes to internal technology andoperational processes.
Transactional testing: Complete spectrum of test cases across client types, asset classes, andtransaction types, on peak volume days.
Client testing: Firms need to understand, plan, and execute client testing. Considerations include
a firm's internal lens and the testing required by clients.
Operational testing: As industry deadlines and batch cycle times change, the integration ofprocesses across platforms is critical in the testing strategy.
Resiliency testing: Firm testing strategies must account for non-optimal client behavior, postsettlement date actions, and system outages.

Activities to Develop Test Plans
Activities to Develop Test Plans#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1 Draft test plan
Confirm readiness with vendors and service
2 bureaus to determine static data andsoftware field updates for internal systems
3 Develop internal testing scenarios and data
4 Conduct internal testing and evaluate results
5

Coordinate external testing with internal andexternal stakeholders

6 Conduct external testing and evaluate results
7 Conduct post-migration testing activities11011.3.2 Migration
11.3.2.A. Prepare for Migration to T+1
SIFMA, ICI, and DTCC, and in discussion with regulators and SROs, will develop a plan (e.g., “run book”)
for the T+1 migration period, including the selection of the migration date and contingency or exception
handling protocols. The selection of the migration date is an important step in the T+1 implementation
process. The migration plan will include industry T+1 Command Center activities around the migration
date and during the period afterwards to coordinate cutover activities, manage challenges that may arise,and field questions or requests for information. Each organization should consider creating an office orfunction to manage migration related activities, and organization contingency plans that may be necessary
given the processes and dependencies of their operations.
The migration to the shortened settlement cycle will result in the settlement of two days of trades on thesame day (e.g., double settlement). This additional settlement volume is not expected to be an issue as
double settlement currently occurs in the T+2 environment (e.g., Columbus Day, Veteran’s Day). Further
details on migration will be defined in the plan. In addition, the ISC should suggest that issuers consider ablackout period for corporate action events over the migration time period.
Beginning Q2 2022, the IWG will meet on a quarterly basis (through year end) and then on a monthly(beginning January 2024) through the migration to T+1.

11.3.2.B. Review Processes Related to Claiming Failed Deliveries, Recalling Securities, and Tracking
Pending Trades Prior to Migration
Organizations that trade around voluntary reorganization expiration dates must review their processes
prior to moving to T+1 in order to claim failed deliveries, recall securities, and track trades pending
settlement.
Organizations should review processes around migration, including processes related to voluntary
reorganization expiration dates, specifically failed deliveries, recall of securities, and pending trades prior
to migration to T+1. These considerations include, but are not limited to the following:•

Claim Failed Deliveries: Organizations should review, and adjust as necessary, processes for
identifying and claiming failed trades in the T+1 environment. Although the process for claiming failed
deliveries will not change, the timeframe will be shortened by one day.

•

Recall Securities: The process of recalling securities will need to be revised to account for the
shortened settlement cycle. Organizations should review, and adjust as necessary, recall processes.
Organizations should revisit their proxy voting policy to determine the impact of the move to T+1.
Operational risk can be mitigated through active monitoring of security lending recalls.

•

Pending Trades: Organizations should review internal processes (e.g., trade financing) to ensure thattracking of pending trades is updated to account for the shortened settlement period. This may
include online and offline reports, internal processes, and data points within systems used to help
facilitate the process.

111

12 Path forward
12.1

Introduction

As was done in 2017 for the move to T+2 settlement, the ISC developed and delivered this Playbook tomarket participants to assist the industry with the migration to T+1 settlement. Needless to say, thejourney to T+1 settlement is not complete. Going forward the ISC will develop a plan and governanceprocess for communicating the structure, processes, and resources that will be necessary for market
participants to transition to a T+1 environment. The ISC will be responsible for the following:• Continued assessment of industry and market participant preparedness• Developing an industry-wide communication and socialization plan
• Identifying and escalating potential risks• Creating a T+1 Command Center to guide the industry to T+1 settlement through supplying economic
impact analysis, facilitating industry awareness, publishing industry progress reports, publishing FAQs,
and update this playbook• Providing leadership during the period leading up to the migration to T+1

12.2

Timeline and Milestones

The following timeline illustrates the industry actions and milestones necessary to meet a May 28, 2024,
U.S. T+1 implementation:

12.3

Next Step Activities

The list below highlights some of the path forward activities that should take place through the T+1
implementation:

112

#

Next Step

Scope of Step
• ISC to publish Playbook

1

Playbook socialization• Playbook education and socialization dates to be set for industry
sessions

2

Regulatory updates• ISC will continue to advocate timely regulatory rule changes

3

Migration date agreement• ISC in discussion with regulators will agree on a migration date andadvise markets participants• Establishment of an industry level PMO

4

PMO establishment• Organization should also establish PMO to capture market
participant announcements and track implementation activity
progress

5

T+1 Command Centercreation• ISC will create a T+1 Command Center to assist with T+1
announcements and issue resolution

6

Proposed rule change
notification and comment
Periods

7

Additional market
requirement changes• SRO and SEC notification of proposed rule changes• Comment period on proposed SRO and SEC rule changes• DTCC notification of proposed rule changes• New issues or additional implementation activities thatorganizations may want to address should be raised to the ISC team,so they can be shared and discussed with the industry• Develop and execute internal test plans

8

Testing• Develop and execute external test plans• Industry testing and certification

9 Post-migration planning

12.4• Industry metric planning• Industry operational check points

SummaryThis document can serve as a guide for impacted market participants that will need to make operational
process, technological, and personnel changes to prepare for migration to a T+1 settlement cycle. It
provides a high-level approach with recommended implementation activities and associated timelinesthat organizations can leverage internally and in discussions with customers and counterparties. When
combined with the DTCC testing documentation and testing documentation, organizations will have acomprehensive plan that can be used as an end-to-end roadmap for readiness activities leading up to the
May 28, 2024, U.S. T+1 migration date.
113

13 Appendix
13.1 T+1 Industry Implementation Timeline & Milestones

114

13.2

T+1 Industry Implementation Activity Dependencies

Migration

Industry Testing

Implementation

Industry Action

Implementation Activity

Dependency

T+1 Industry Implementation Playbook
developed and published

Review of industry systems and Procedures

T+1 Industry Implementation Playbook
Socialization

Dependent upon successful publication ofPlaybook

Financial advisor and client T+1 education

Dependent on successful publication of the
Playbook

Industry Steering Committee (ISC) considers Dependent upon agreement of the ISC and theT+1 migration dateindustry
Ongoing ISC governance, oversight ofindustry T+1 implementation, and creationof project management office (PMO)

Dependent on path forward approach andscheduling approach by the ISC to engage theindustry on a predetermined schedule

ISC establishes T+1 Command Center

Dependent upon selection of migration date

Development of individual market
participant’s implementation plans

Dependent on proposed rules; should not be
dependent of final rule set

Execution of individual market participant’s Dependent on the build and scope of development
implementation plansof market participant plans and final rules
Individual market participant (internal),
vendor, and service bureau testing

Dependent upon internal vendor and service
bureau system enhancements, procedural
updates, and internal user acceptance sign-off

Development of DTCC high-level industry
test approach

Dependent on the preliminary DTCC test plan andcreation of DTCC T+1 Functional

Coordination of vendor and service bureau
test plans with clients

Dependent upon completion of individual market
participant implementation, vendor, service
bureau, and DTCC readiness

DTCC and market participant readiness forindustry testing

Dependent on DTCC detailed industry test planand environment configuration

Round-trip industry testing with DTCC

Dependent on DTCC and market participant
testing readiness

ISC “go” or “no-go” decision to move
forwardDependent on ISC review of testing results andoverall readiness determination

T+1 Command Center prepares for
migration

Dependent on DTCC and market participant
testing readiness115Implementation Activity

Dependency

Industry migration to T+1 settlement

Dependent on the industry “go” or “no-go”
decision

Assessment of post-migration activities

Dependent on migration to T+1

116

13.3 T+1 Market Participant Implementation Timeline & Milestones

11713.4 Heat Map

13.5 Product List
Common Stock

T+1 Impacted Product Scope 43
Equities

Common Stock Real Estate Investment Trust (REIT)
Convertible Common Stock
Equity Units
Equity Derivatives

Preferred Stock

Preferred Stock REIT
Tender Rate Preferred Stock
Auction Rate Preferred Stock
Convertible Preferred Stock
Preferred Perpetual

American Depositary Receipts (ADR)
Exchange Traded Funds (ETF)
Exchange Traded Products
Exchange Listed Limited Partnerships
Exchange Traded Notes
43

Securities that settle at the Federal Reserve are not included. This list relates only to DTC eligible securities.

118T+1 Impacted Product Scope 43
Mutual Funds

Fixed Income
Corporate Debt or Global Corporate Bond
Medium-Term Note
Corporate Debenture
Corporate Debt Derivative
Corporate Auction Rate Note
Convertible Corporate Debt
Debt Units
Zero Coupon Bond
Pass Thru Certificates (Corporate Debt)
Zero Coupon Denominated in Initial Principal Amount
Bearer/Callable Zero-Coupon Bond
Equipment Trust Certificate (Corporate Debt)
Demand Note
Corporate Other Tax Exempt
Corporate Insured Custodial Receipt
Credit Linked Note
Commodity Linked Note

Municipal Debt

Municipal Auction Rate Note
Municipal Insured Custodial Receipt
Index Linked (Municipal Bond)
Municipal Variable Mode Obligation (VMO)
Municipal Option Call Right
Municipal Other Tax Exempt
Municipal Other Tax Exempt
Municipal Note
Municipal Amortized Issue
Municipal Insured Custodial Receipt
Stepped Coupon (Municipal Bond)
Municipal Bond

Asset-Backed Security (ABS) or Global ABS
CMO Floater (non-agency)
Collateralized Mortgage Obligation (CMO)
Sinkable Floater (ABS)
Collateralized Loan Obligation
Mortgage-Backed Securities 44
Structured Product
Non-CMO/ABS Amortizing Issue

Derivatives
44

Mortgage-Backed Pass-Through Securities such as To Be Announced (TBAs) and Specified Pools that settle at the Federal Reserve are notincluded.

119T+1 Impacted Product Scope 43
Warrants
RightsMoney Market Instruments

Certificate of Deposit
MMI Institutional Certificates of Deposit
Certificated Money Market - Periodic Payer
MMI Medium Term Note
Certificated Money Market Instrument
MMI Medium-Term Bank Note
Commercial Paper (Money Market)
MMI Municipal Commercial Paper
MMI Bankers' Acceptance Note (BA)
MMI Corporate Commercial Paper
MMI Short-Term Bank Note
MMI Corporate VRDO/CP
MTN Medium Term Note
MMI Deposit Note
Municipal Amortized Issue
MMI Discount Note
Tender Rate Note
Unit Investment Trust (UIT)

Miscellaneous

When Issued Securities45

Corporate Insured Custodial Receipt
Limited Partnership
Private Investment Public Equity (PIPE)

45

When issued securities trade when they are announced but not yet issued. However, when they are issued, they settle regular way.

120

13.6

Baseline Metrics for T+1

The dimensions columns are intentionally left blank to allow users of the Playbook customize the table
to use during the analysis period. This table is meant to be used an exercise that firms can undertake.
T+1 Baseline Metrics
Dimensions
MetricCategory

MetricCount/
Value

Product

Legal
Entity/Lineof Business

U.S. Equities/DTCC eligible products
Trade Volume

Fixed income (e.g., US
treasuries/Bonds)/DTCC population
ETFs/ETNs
ADRs/MLPs
Metrics for trades unmatched from T+1:
Due to SSI mismatch
Due to product not being Setup
Due to inventory
Due to counterparty missing
instructions
Due to mismatch on trade details

Fail Rates

Due to ongoing corporate action event
Fails resolved by manual intervention
Fails resolved by Client sending correct
trade file
Fails resolved by counterparty matching
Fails due to trades being “don’t know’d”(DK'd) 46
Average Time to Resolve Fail46

A DK’d trade results when one of the parties has a dispute or rejects the trade due to a given discrepancy.

121T+1 Baseline Metrics
Dimensions
MetricCategory

MetricCount/
Value

Product

Legal
Entity/Lineof Business

Average Daily Count of Allocations
Allocated on T
Allocated on T+1
Allocation
Rates

Allocated on T+2
Percentage of allocations on trade date(T) after 7:00 PM ET
Number of clients not sending trades on
T
Average Daily Affirmation Rate
Affirmed on T

Affirmation
Rates

Affirmed on T+1
Affirmed on T+2
Percentage of affirmations done after
9:00PM ET on T
Number of buy-in due to Insufficient
Stock

Buy-in (DTC)

Number of buy-in due to no locate inplace
Buy-in due to settlement error
Number of buy-in due incorrect place ofsettlement (e.g., trade booked in Italy
instead of DTC)

Trade Errors

Number of trades manually touched
everydayReason for trades being manually
touched122

T+1 Baseline Metrics
Dimensions
MetricCategory

MetricCount/
Value

Product

Legal
Entity/Lineof Business

Trade failed due to manual error
Corporate
Actions

Average volume of corporate action
eventsBi-lateral trades (daily, weekly, monthly,etc. for all)
Margin/Exposure/Collateralmanagement

Securities
Lending

Contract Compare breaks
Delivery versus Payment (DVP) vs Freeof Payment (FOP)
Recalls (Securities Industry Automation
Corporation (SIAC), etc.)
Reg SHO 204 (failure to deliver)
Number of manual checks

Payments

Average ACH timing
Average ACH volumes

12313. 7 T+1 Trade Processing Comparison Chart
The following chart lists the critical trade processing and settlement activities and deadlines identified
by the IWG that will be impacted by T+1, either directly or indirectly, and involve one or more market
participants. Rows highlighted in blue indicate a proposed change from the current-state (T+2) and are
the proposed IWG recommendations for the future-state (T+1) processing timelines and deadlines.
Activity#

Activity
Name

Current State
Time

Future State
Target 47 Time

1

NAV Calculation
Processing

ITP. DTC and NSCC
Technical Names &Job Numbers

6:00PM on T

6:00PM on T

N/A

CTS 1 Report

9:00PM on T

2

3

4
5
6
7
8

9

10

47
48

CTS 2 Report

CNS Projection
ReportFedwire Funds
Opens
Fedwire Funds
Closing Time
1st ACH
Deadline (1 PMS)
ITP Affirmation
CutoffCTS 3 Report

ITP Cumulative
Report11:59PM on T

10:00PM on T

1:30AM on T+1

CTS MACHINE READABLEOUTPUT MRO
Autoroute#- 02042339MROCTS COMMA SEPERATEDVALUES CSV Autoroute#02042340- CSV
CTS MACHINE READABLEOUTPUT MRO
Autoroute#- 02042339MROCTS COMMA SEPERATEDVALUES CSV Autoroute#02042340- CSV
MRO AutoRoute#
02042022
Print Image Autoroute#
02040009

12:30AM on T+1

2:00AM on T+1

9:00PM on T

9:00PM on T

N/A

7:00PM on T+1 48

7:00PM on T+1

N/A

10:30AM on T+1

10:30AM on T+1

N/A

11:30AM on T+1

9:00PM on T

N/A

11:45AM on T+1

12:00PM on T+1

1:45PM on T+1

9:30PM on T

CTS MACHINE READABLEOUTPUT MRO
Autoroute#- 02042339MROCTS COMMA SEPERATEDVALUES CSV Autoroute#02042340- CSV
Technical file
name=Cumeter

Dependencies

Firm tradesubmissions in
NSCC

Firm tradesubmissions in
NSCC

Form 1 ScheduleA

Firm tradesubmissions in
NSCC

These are the expected Future State Targets times and not the DTC and NSCC SLA proposed times.
https://www.newyorkfed.org/aboutthefed/fedpoint/fed43.html

124

Activity
Name

11

CNS Midday
Projection File

12:00PM on T+1

5:00PM on T+1

12

2nd ACH
Deadline (5 PM
S)

CNS Midday Projection
File (MRO Autoroute#
02042358)(Print Image
Autoroute# 02042366)

2:45 PM on T+1

2:45PM on T+1

N/A

5:00PM on T+1

5:00PM on T+1
Disaffirmations
between 9:00PM on T
to 1:30PM on T+1
would result in reversal
transactions being
generated for same day
settlement. If theoriginal PB transactionis unsettled, thedisaffirmation will net
against the originaltransaction. If theoriginal PB transaction
is settled, thedisaffirmation will
result in new NSCC
position to be settled.
Both scenarios could
impact both the PB and
EB NSCC intraday
margin requirements
and could result in
intraday margin calls.
Disaffirmations
between 1:31PM on
T+1 to 5:00 p.m. on T+
1 would result inreversal transactions
being generated for the
next day settlementday (S+1). Similar toabove, if the original PB
transaction is unsettled,
the disaffirmation will
net against the originaltransaction. If theoriginal PB transaction
is settled, thedisaffirmation will
result in new NSCC
position to be settled.
Both scenarios will
impact both the PB andEB settlement day +1
NSCC margin
requirement.

13

Prime Broker
Disaffirmation

Current State
Time

Future State
Target 47 Time

ITP. DTC and NSCC
Technical Names &Job Numbers

Activity#

Dependencies

Input- TRADESUITE ID™
ADVICE OFCANCELLATION OR
CORRECTION MESSAGE
SPECIFICATION- AOT1
(MQ) or AOT5 (FTP and
NDM) and the output
messages are placed in a
CDSC mailbox. Message
Type on the message
header is AOCCNF.
Output- TRADESUITEID Confirm Trade
OutPut Message
Specification- Input for
Trade Confirmations is
TRAM (MQ) or TRAC
(FTP and NDM) andthe output messages
are placed in a CDSC
mailbox. Message
Type on the message
header is CONFRM.
Trade Cancellations
and Attempt to Cancel
records are confirms
with updated status
codes and would also
be Message TypeCONFRM.

125

Activity#

Activity
Name

Current State
Time

14

Authorizations
and Exemptions
for ID, and CNS
transactions

6:30PM on T+1

15

Exemptions for
ID Nettransactions

16

CNS Position
Prior to Night
Cycle

17
18
19

20

21

22
23
24

25
26

27

CNS Position
Prior to the Day
Cycle
DTC Night Cycle
Batch Process
BeginsDTC Night Cycle
Batch Process
Completed
DTC Night Cycle
OutputInitial NSCC
Margin Calls
PlacedFedwireSecurities
movement
opens
NSCC Funding
Due
DTC Delivery
Cutoff for
ValuedTransactions
DTC Delivery
Cutoff for Free
Deliveries
Close ofBusiness
Settlement

Memo Seg

Future State
Target 47 Time

ITP. DTC and NSCC
Technical Names &Job Numbers

10:45PM on T

ID ANE

11:30AM on T+1
to be eligible for
DTCs Night Cycle
process
11:30AM on SD
for DTCs Day Cycle
process

9:15PM on T to beeligible for DTCs Night
Cycle Process
11:30AM on SD for
DTCs Day Cycle process

ID Net

7:30PM on T+1

9:30PM on T

MRO AutoRoute#
02040951
Print Image
Autoroute# 02040950

12:30AM on T+1

2:00AM on T+1

MRO 02040949
Report 02040950

8:30PM on T+1

11:30PM on T

N/A

10:30PM on T+1

1:30AM on T+1

N/A

Dependencies

Deliver Orders

Technical file
name=DTCPDQ

10:30PM on T+1

1:30AM on T+1

2:00AM on T+1

2:00AM on T+1

N/A

NSCC Margin
Calculations

8:30AM on T+2

8:30AM on T+1

N/A

N/A

10:00AM on T+1

10:00AM on T+1

N/A

3:00PM on T+2
3:10PM on T+2(recycle cutoff)

3:10PM on T+2

N/A

6:15PM on T+2

6:15PM on T+1

N/A

3:45PM on T+2

3:45PM on T+1

N/A

24x5
(Typically, 3AM8AM)

24x5
Best Practice: 9PM 11PM

Output = DTFPDQ

Output File
MEMOSG (4.06): Memo
Segregation Activity
DTFMEM (4.05): Memo
Segregation Balances

126

Activity#

Activity
Name

Current State
Time

Future State
Target 47 Time

ITP. DTC and NSCC
Technical Names &Job Numbers

Dependencies

MQ_SEG (20.06): SEG andMEMOSEG (Output)
Input File
SEG1/5 (4.08):
Segregation/Memo
Segregation/Investment
ID Input FileISO Input
ISO 15022 Message
Layouts - Segregation/Seg
Release/Memo
Segregation/Investment
ID/Investment ID Release
Input
ISO Output- ISO MSEG
output is the standard
long form MT548

28

CNS Night
MiscellaneousFile

12:30AM on T+2

2:00AM on T+1

29

CNS Day
MiscellaneousFile

3:30PM on T+2

3:30PM on T+1

30

CNS Accounting
Summary

3:30PM on T+2

3:30PM on T+1

CNS Night
Settlement
Activity

10:30 PM on T+2

2:00 AM on T+1

CNS Day
Settlement
Activity

3:30 PM on T+2

Print Image AR#
02040005

31

32

Best practice for MemoSeg between 9pm and11pm should be used tomake adjustments toexisting MS positions or
add new ones.
MRO
Autoroute#02042008
MRO Extended Record ID
Net Autoroute#02040343
Print Image Report
Autoroute#02040001
MRO
Autoroute#02040331
Print Image
Report#02041235
MRO Extended Record ID
Net Autoroute#02040331
MRO Autoroute#02042024
Print Image Autoroute
02040012
MRO AR# 02042023

3:30 PM on T+1

MRO AR# 02041234

Displaysthe receives
from CNS andthe delivers to
CNS thatoccurred
during thenight cycle
Displays thereceives from
CNS and127

Activity#

ActivityName

CNS Preliminary
Cash
Reconciliation

Current State
Time

Future State
Target 47 Time

ITP. DTC and NSCC
Technical Names &Job Numbers
Print Image AR#
02040010

delivers to
CNS thatoccurred
during the day
cycle

12:30 AM on T+2

2:00 AM on T+1

Print Image AR#
02040006

Displays thesummary of
all CNS money
activity that
occurred
during thenight cycle

3:30 PM on T+2

3:30 PM on T+1

Print Image AR#
02040011

Displays theend-of-day
summary of
all CNS money
activity

8:15PM on T+1

10:30PM on T

12:30AM on T+3

2AM on T+2

N/A

Real Time starting at
7:30AM ET on T+1 until
1:30PM ET on T+1

MRO Autoroute#
02040996(Print Image
Autoroute# 02040002)
Autoroute# 02040890(Print Image Autoroute#
02040891)
TBD

8:30 ET AM –11:30 AM ET on
T+2

8:30 ET AM – 1:30 PM
ET on T+1

33

34

CNS Final Cash
Reconciliation

35

CNS Balance
Order MRO36

CNS Buy -In
Activity37

New Real-time
MQ Summary &Balance Order
Message

CNS Intraday
ISO 15022

38

Dependencies

Real-time message that
informs Members of CNS
intra-day positionchanges resulting fromsame day settling tradesor same day
miscellaneous activity
updates

13.8 Documentation
Documentation
Reference

Document(s)Internal

External

X

X

5.1.A

10b-10 Confirmations

5.1.B

Balance Restriction Documentation

X

5.1.C

Client Account Opening Documents

X

5.1.D

Client Account Statements and DisclosuresX

T+1 Impact(Yes/No)128

Documentation
Reference

Document(s)Internal

External

5.1.E

Corporate Actions Notifications

X

5.1.F

Custody and Sub-Custody Documents

X

5.1.G

Fund Prospectus and Statements

X

5.1.H

Letter of Transmittal for Voluntary Corporate
Actions

X
X

5.1.I

Loan Agreements (e.g., Master Securities Loan
Agreement, Master Securities Loan Agreement, and
ISLA)

5.1.J

Margin Call Notifications

X

5.1.K

Notices of Execution

5.1.L

Product Issuance Documents for Rights andWarrants

X

5.1.M

Reinvestment Agreements and DRIP Documents

X

5.1.N

Stock Loan Recall Notices

X

5.1.O

Trading Relationship Agreements (e.g., ETFs)

X

5.1.P

CNS ID Net Announcements

X

X

5.1.Q

Subscription Documentation

X

X

5.1.R

Transfer Agent Announcements

X

X

5.1.S

Utility, Vendor, and Service Bureau Product Guides

X

X

5.1.T

Vendor and Service Bureau Contracts and Service
Agreements

X

X

5.1.U

Standard Settlement Instructions

X

X

5.1.V

Accounting Policies

X

5.1.W

Internal Control and Compliance Documentation

X

5.1.X

Operating Procedure Documentation

X

5.1.Y

Trading, Liquidity, and Cash Flow Models

X

5.1.Z

Client Awareness Brochures

X

X

5.1.AB

Customer and Internal T+2 to T+1 Notices

X

X

X

T+1 Impact(Yes/No)X

129

Documentation
Reference

Document(s)Internal

External

5.1.ACInternal Training Materials

X

5.1.ADInternet and Intranet Information

X

X

5.1.AE

Qualified Institutional Buyer (QIB) documentation

X

X

5.1.AF

Customer and internal settlement notices

X

X

5.1.AG

New accounts

X

X

5.1.AH

System administrative messages (e.g., CNS ID Net
announcements, Transfer Agent announcements)

X

X

5.1.AI

Client account agreements

X

X

5.1.AJ

Agreement between PB and EB (typically Form 150)

X

X

5.1.AK

Securities loan agreements (e.g., NSKA, Master
Securities Loan Agreement, and ISLA)

X

X

5.1.AL

Trading relationship agreements (e.g., ETFs,
Employee Stock Ownership Plans)

X

X

5.1.A.J

Global Master Repurchase Agreements

X

X

T+1 Impact(Yes/No)13.9 Implementation Activities Tables
Activities to Configure Trading Systems#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory trading systems, including
hardware and software (completeness1 check)2

Determine systems with in-scope products
impacted by T+1 implementation

Examine changes required to systems forsettlement date configuration (e.g.,3
hardcoding vs. logic in programs)
4

Assess the impact of required changes to
upstream and downstream systems

130Activities to Configure Trading Systems#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine responsibility for trading systemchanges (proprietary vs. external vendor and5
service bureau)
6

Coordinate trading system changes withinternal and external stakeholders

7 Develop trading system test plans
Schedule and execute system changes(consider customer experience and user
8 interface continuity when scheduling trading
system changes)

Activities to Update Reference Data#

Implementation Steps

1

Identify data sources and inventoryreference data (completeness check)2

Determine reference data impacted by T+1
implementation (coordinate with vendors andservice bureaus if necessary)

3

Assess the impact to downstream systems
and data and interconnecting activities forreference data changes

4

Examine impact of reference data changes onregulatory compliance requirements

5

Determine responsibility for reference datachanges (proprietary vs. external vendor andservice bureau)

6

Coordinate reference data changes withinternal and external stakeholders

7

Develop reference data test plans (consider
how to migrate reference data on T+1
migration date while continuing operations on
T+2 settlement)

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems131

Activities to Update Reference Data#

Implementation Steps

8

Schedule and execute reference datachanges

9

Review SSI data quality

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Activities to Review Trade Funding Processes and Payment Mechanisms#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade funding, as well as payment
1mechanisms, are included in inventories forconfiguration
Examine upstream system, data, and process
2 changes to ensure that they do not interferewith the process for trade funding
Determine changes required to processes
3 related to trade funding including any global
trade funding
Assess how changes to payment
4 mechanisms impact policies, procedures,and controls
Develop capacity for mobile deposits orother electronic payment methods andrecommend these methods to customers
5(consider efficiencies to decrease check andAutomated Clearing House (ACH) processing
time for retail investors)
Coordinate changes to payment mechanisms
6 and processes related to trade funding withinternal and external stakeholders
7

Develop trade funding process and payment
mechanism test plans132

Activities to Review Trade Funding Processes and Payment Mechanisms#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute changes to trade
8 funding and payment mechanism processes,
policies, procedures, and controls
9

Communicate changes to trade funding
policies and procedures to customers

Activities to Revise Mutual Fund Settlement Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1 Inventory mutual funds
2

Determine whether to revise mutual fundsettlement dates

3

Assess changes required for mutual fundsettlement date configuration

4

Coordinate with DTCC to revise mutual fundsettlement dates within Fund/SERV

5

Develop test plans for settlement ofmutual funds

6

Schedule and execute mutual fundsettlement date changes

Activities to Adjust ETF Create and Redeem Processes#

Implementation Steps

1

Review ETF Create and Redeem processes
to meet agreed upon cut-off times

2

Develop test plans for ETF creation
and redemption

3

Schedule and execute ETF settlement
date changes

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems133

Activities to Review Trade Order Management and Trade Capture Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade order management and
1 trade capture are included in inventories forconfiguration (i.e., Trade Order Management
Solution (TOMS), UTC)
Determine changes required to processes
2 related to trade order management andtrade capture
Coordinate changes to processes related to
trade order management and trade capture3
with internal and external stakeholders (e.g.,
FIX, SWIFT)
4

Develop test plans for trade ordermanagement and trade capture5

Schedule and execute process changes for
trade order management and trade capture

Activities to Standardize Communication Protocols for Trade Away Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade away processes are
1 included in inventories for configuration(i.e., Trade Order Management Solution(TOMS), UTC)
Determine changes required for trade away
2 processes and relevant communication
protocols
Coordinate changes to processes related to
3 trade away communication protocols withinternal and external stakeholders (e.g., FIX)

134

Activities to Standardize Communication Protocols for Trade Away Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Develop test plans for standardize
4 communication protocols for trade away
processes
Schedule and execute process changes for
5 standardization of communication protocols
for trade away processes

Activities to Update Trade Matching Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to trade matching are included ininventories for configuration
Examine upstream system, data, andprocess changes to ensure that they do not2interfere with the process for trade
matching
3

Determine changes required to processes
related to trade matching

Coordinate changes to processes related to
4 trade matching with internal and external
stakeholders
5 Develop test plans for trade matching
6

Schedule and execute process changes for
trade matching135

Activities to Align Industry-Recommended Allocation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade allocations are included in1inventories for configuration
Examine upstream system, data, andprocess changes to ensure that they do not
2 interfere with the process for trade
allocations
3

Determine changes required to processes
related to trade allocations

Coordinate changes to processes related to
trade allocations with internal and external
4
stakeholders
5 Develop test plans for trade allocations
6

Schedule and execute process changes for
trade allocation timelines

Activities to Configure Purchase and Sales Systems for Near-Time Matching#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to Purchase and Sales systems for
1 near-time are included in inventories forconfiguration
Examine upstream system, data, andprocess changes to ensure that they do not
2 interfere with Purchase and Sales systems
for trade matching
Determine changes required to configure
3 Purchase and Sales system processes fornear-time trade matching136

Activities to Configure Purchase and Sales Systems for Near-Time Matching#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Coordinate changes to processes related tonear-time trade matching with internal and4 external stakeholders
Develop test plans for configuration of
5 Purchase and Sales systems for near-time
matching
Schedule and execute process changes for6 Purchase and Sales systems for near-time
matching

Activities to Review Trade Affirmation Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to trade affirmation are included ininventories for configuration
Examine upstream system, data, andprocess changes to ensure that they do not2interfere with the process for tradeaffirmation
Determine changes required to processes
3 related to trade affirmation and new cutoff
time
Coordinate changes to processes related to
4 trade affirmation with internal and external
stakeholders
Develop test plans for affirmed andunaffirmed eligible institutional trade5
submission, prime broker transactions, andID Net transactions
6

Schedule and execute process changes foraffirmed trade submission
137

Activities to Review Trade Affirmation Processes#

7

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Utilize services (e.g., ITPs M2i) to achieve
maximum affirmations

Activities for Changes to the Timing of NSCCs CNS Projection Reports#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory projection reports, including
created projection reports and those
1 received and used from other organizations(i.e., cash projection reports, CNS
Projection Report)
2

Assess projection reports for changes fromT+1 settlement

Determine if settlement date changes to
3 projection reports will be automatically
captured or need to be manually updated
4

Coordinate changes to projection reports
with internal and external stakeholders

5

Develop test plans for activities related toprojection reports

6

Schedule and execute changes for
projection reports

Activities to Align Industry-Recommended Affirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to trade affirmations are included in1inventories for configuration

138

Activities to Align Industry-Recommended Affirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Examine upstream system, data, andprocess changes to ensure that they do not
2 interfere with the process for tradeaffirmations
3

Determine changes required to processes
related to trade affirmations

Coordinate changes to processes related to
trade affirmations with internal and4external Stakeholders
5 Develop test plans for trade allocations,confirmations, and affirmations
6

Schedule and execute process changes for
trade affirmation timelines

Activities to Standardize Communication Protocols Among Affirming Parties#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to communication protocols among
affirming parties are included in inventories
1 for configuration (i.e., Trade OrderManagement Solution (TOMS), UTC)
Determine changes required for affirming
2 parties and relevant communication
protocols
Coordinate changes to processes related toaffirming parties’ communication protocols
3with internal and external stakeholders(e.g., FIX)
Develop test plans for standardized
4 communication protocols among affirming
parties139

Activities to Standardize Communication Protocols Among Affirming Parties#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute process changes for
5 standardization of communication
protocols among affirming parties

Activities to Decommission Physical Securities#
1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory platforms supporting physicalsecurities delivery

Determine platforms supporting physical2 securities delivery impacted by T+1
implementation
Assess changes required to decommission
3 platforms supporting physical securities
delivery for T+1 settlement
Determine responsibility for platform
4 changes (proprietary vs. external vendor
and service bureau)
5

Coordinate platform changes with internaland external stakeholders

6

Develop test plans for decommissioning
physical securities delivery

7

Schedule and execute changes todecommission physical securities

Activities to Adjust Processes and Systems Related to Physical Securities#

1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory platforms supporting physicalsecurities delivery
140

Activities to Adjust Processes and Systems Related to Physical Securities#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine platforms supporting physical2 securities delivery impacted by T+1
implementation
Assess changes required to platforms
3 supporting physical securities delivery forT+1 settlement
Determine responsibility for platform
4 changes (proprietary vs. external vendor
and service bureau, issuers)
5

Coordinate platform changes with internaland external stakeholders

6

Develop test plans for physical securities
delivery for T+1 settlement

7

Schedule and execute changes to physicalsecurities for T+1

Activities to Configure Ex-Date Changes#

Implementation Steps

1

Identify and inventory instances where exdates are generated or received

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Conduct conversations with vendors and2 service bureaus to ensure that ex-dates arecaptured, tested, and approved
3

Assess changes required to systems for
capturing ex-dates

Review processes for corporate action events
4 to determine impact of ex-date changes
5

Examine impact of ex-date changes tocompliance and oversight requirements

141

Activities to Configure Ex-Date Changes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure materials regarding T+1 ex-date
6 implications are included in customer
communication plans
7

Develop ex-date and corporate action event
test plans

8 Schedule and execute ex-date changes

Activities to Adjust Ex-Date Notification Announcement Systems#

Implementation Steps

1

Identify announcement systems used for exdate notifications

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine impact to ex-date notifications
2 and announcement systems for T+1
settlement
Coordinate ex-date notification and3 announcement system changes with internaland external stakeholders
4

Develop ex-date notification andannouncement system test plans

5

Schedule and execute announcement systemchanges

Communicate changes to ex-date
6 notifications and announcement systemchanges to external organizations

Activities to Modify Internal Processing Systems that Calculate Ex-Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data related
1 to ex-date calculations are included ininventories for configuration
142

Activities to Modify Internal Processing Systems that Calculate Ex-Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Evaluate the impact on downstream processes
2 (internal and external) for system and ex-date
calculation changes
Determine responsibility for ex-date calculation
3 changes (proprietary vs. external vendor andservice bureau)
4

Coordinate changes with internal and external
stakeholders

Develop internally calculated ex-date test plans(consider how to make changes on T+1
5
migration date while continuing T+2 settlement
operations)
6

Schedule and execute changes related tointernal ex-date calculations

Activities to Adjust Due Bill Processing#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to due bill processing are included in
1 inventories for configuration
2

Determine changes required for due billprocessing

3

Coordinate due bill processing changes withinternal and external stakeholders

4 Develop test plan for due bill processing
5

Schedule and implement due bill processingchanges143

Activities to Modify Interim Accounting Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to interim accounting are included
in inventories for configuration
Evaluate the impact on downstream
2 processes (internal and external) for interim
accounting process changes
Determine responsibility for interim
3 accounting process changes (proprietary vs.
external vendor and service bureau)
Coordinate interim accounting process
4 changes with internal and external
stakeholders
5 Develop interim accounting testing plans
6

Schedule and execute changes related tointerim accounting

Activities to Review Reorganization Announcement Platforms#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that reorganization announcement
1 platforms and reference data are included
inventories for configuration
Evaluate the impact to downstream systems
and processes (internal and external) for2
reorganization announcement platformchanges
Determine responsibility for reorganization
announcement platform changes
3(proprietary vs. external vendor and service
bureau)Coordinate reorganization announcement
4 platform changes with internal and external
stakeholders
144

Activities to Review Reorganization Announcement Platforms#

Implementation Steps

5

Develop test plans for reorganization
announcement platforms

6

Schedule and execute changes related toreorganization announcement platforms

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Activities to Modify Voluntary Reorganization Processing Applications#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to voluntary reorganization
1
processing are included in inventories forconfiguration
Evaluate the impact to downstream
processes (internal and external) for2
voluntary reorganization processingchanges
Determine responsibility for voluntary
3 reorganization process changes (proprietaryvs. external vendor and service bureau)
Coordinate voluntary reorganization
4 processing changes with internal andexternal stakeholders
Develop test plans for voluntary
5 reorganization processing applications andvoluntary reorganization event processing
6

Schedule and execute changes related tovoluntary reorganization processing

145

Activities to Update Internal Processing Systems that Consume Cover/Protect Dates#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to cover/protect date calculations
are included in inventories for configuration
Evaluate the impact on downstream
processes (internal and external) for system2
and process changes related tocover/protect date calculations
Determine responsibility for cover/protect
3 date calculation changes (proprietary vs.
external vendor and service bureau)
4

Coordinate changes with internal andexternal stakeholders

5

Develop internally calculated cover/protect
date test plan

6

Schedule and execute changes related tointernal cover/protect date calculations

Activities to Adjust Stock Record Platforms as Necessary#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to stock record platforms areincluded in inventories for configuration
Evaluate the impact on downstream
processes (internal and external) for system2
and process changes related to modificationof stock record platforms
Determine responsibility for stock record
3 changes (proprietary vs. external vendor andservice bureau)
4

Coordinate stock record changes withinternal and external stakeholders146

Activities to Adjust Stock Record Platforms as Necessary#

Implementation Steps

5

Develop internally calculated stock record
test plan

6

Schedule and execute changes related tomodification of stock record platforms

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Activities to Assess Dividend Reinvestment Plans#

Implementation Steps

1

Determine required changes for DRIPs
due to T+1 settlement

2

Determine required changes to issuance ofDRIP shares (if open market purchases)

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine required changes to DRIP
3 communications resulting in shortened
settlement cycle
4

Develop test plans for DRIP changes for T+1
settlement

5

Schedule and execute changes prior to T+1
settlement

6

Advise plan participants of changes to DRIP
functionality

Activities to Update External Client-Facing Documentation#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory external client-facing
documentation that references T+2
1
settlement, including electronic documents
and website information
Inventory static data resources used for2 auto-populating documentation thatreference T+2 settlement
147

Activities to Update External Client-Facing Documentation#

Implementation Steps

3

Determine which identified documents need
to be updated

4

Create master list of required documentation
changes5

Coordinate documentation changes withinternal and external stakeholders

6

Schedule and execute identified changes todocumentation

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Cross-reference updates with master list of
7 required documentation changes to ensure
accuracy and completeness

Activities to Update External Service Agreement Documentation#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory vendor and service bureau
documentation that references a two-day
1 settlement period, including agreements,
service descriptions, product guides, andfee schedules
Update external vendor and service
2 bureau documentation for a one-day
settlement
Review, approve, re-negotiate, and re3 authorize changes to documentation asnecessary
Test the execution of updated
4 documentation in the delivery and pricing ofservices

148

Activities to Determine Impact of E-Delivery for Client Groups#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory vendor and service bureau
documentation that is required to be
1 delivered to clients, including agreements,
service descriptions, product guides, andfee schedules
Determine e-delivery procedures and2 documentation that reference T+1
settlement
3

Assess changes required to e-delivery
procedures and documentation

4

Coordinate changes with internal andexternal stakeholders

5 Coordinate changes with client groups
Schedule and execute required changes to
6 identified e-delivery procedures anddocumentation
7

Test the execution of updated e-delivery forclient groups

Activities to Adjust Operating Procedures and Internal Control Documentation#

Implementation Steps

1

Identify and inventory sources for operatingprocedures and control documentation

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine operating procedures and2 control documentation that reference T+2
settlement
3

Assess changes required to operatingprocedures and control documentation

4

Coordinate changes with internal andexternal stakeholders

149

Activities to Adjust Operating Procedures and Internal Control Documentation#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute required changes to
5 identified operating procedures and control
documentation
6

Document and track changes todocumentation to ensure completeness

Activities to Educate Customers and Staff on T+1 Settlement#
1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Identify customers and staff who require
education related to T+1 implementation

Determine if education materials need to
2 be updated or if new education materials
need to be created
3 Assess changes to staff training materials
4

Assess changes to customer educational
materials

5

Develop a training plan to ensure staff are
adequately trained prior to T+1 conversion

6

Develop a communications plan to address
customer needs

7

Create or update materials for staff andcustomer education

8 Train staff for T+1 implementation
9

Distribute T+1 settlement education material
to customers

150

Activities for Determining Impact on Securities Lending Processes and Procedures#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory securities lending processes
1 and procedures documentation(completeness check)
Ensure that systems and reference data
2 related to securities lending are included
in inventories for configuration
3

Assess the impact of required changes to
upstream and downstream systems

Determine responsibility for securities
4 lending changes (proprietary vs. externalvendor and service bureau)
5

Coordinate changes with internal andexternal stakeholders

6

Develop exercise and assignment test
plans

7

Schedule and execute system, process,and documentation changes

Review effective controls to prevent
8 issues (e.g., inadvertent data disclosure,client confidential breach)

Activities to Align to Updated Stock Loan Recall Timing Changes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine required changes to stock
1 loan recall processes for migration to T+1
settlement
2

Determine responsibility for stock loan recall
timing changes

3

Coordinate changes with internal andexternal stakeholders

4

Develop stock loan recall timing changes test
plan
151

Activities to Align to Updated Stock Loan Recall Timing Changes#
5

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute changes prior to
migration to T+1 settlement

Activities to Update Margin Calculation Processes#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to margin calculations areincluded in inventories for configuration
Evaluate the impact on downstream
processes (internal and external) for system2
and process changes related to margin
calculations
3

Determine responsibility for margin
calculation changes

4

Coordinate changes with internal andexternal stakeholders

5 Develop margin calculation test plan
6

Schedule and execute changes related tomargin calculations

Activities to Update Master Securities Loan Agreement#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Inventory Master Securities Loan
1 Agreements that reference T+2
settlement
2 Assess changes required to MSLAs
3

Coordinate changes to MSLAs with internaland external stakeholders152

Activities to Update Master Securities Loan Agreement#

Implementation Steps

4

Schedule and execute identified changes to
MSLAs

5

Document and track changes to MSLAs to
ensure completeness

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Activities for Assessing Regulatory Considerations related to Securities Lending#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1 Assess rule changes for securities lending
Ensure that systems and reference data
2 impacted by rule changes are included ininventories for configuration
3

Determine process changes required tomaintain compliant with rule changes

4

Coordinate changes with both internal andexternal parties

5 Develop rule change test plans
6

Schedule and execute changes for systemchanges7

Update operational policies and procedures
as applicable for each rule change

8

Update compliance policies and procedures
as applicable for each rule change

9

Update regulatory policies and procedures asapplicable for each rule change

Activities to Review Prime Broker Disaffirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1 Ensure that systems and reference data
related to prime broker disaffirmation
153

Activities to Review Prime Broker Disaffirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

are included in inventories forconfiguration
Examine upstream system, data, andprocess changes to ensure that they do not2interfere with the process for prime broker
disaffirmation
3

Determine changes required to processes
related to prime broker disaffirmation

Coordinate changes to processes related to
4 prime broker disaffirmation with internaland external stakeholders
5

Schedule and execute process changes forprime broker disaffirmation

Activities to Review Prime Broker Affirmation Timelines#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
1 related to prime broker affirmation are
included in inventories for configuration
Examine upstream system, data, and process
2 changes to ensure that they do not interferewith the process for prime broker affirmation
3

Determine changes required to processes
related to prime broker affirmation

Coordinate changes to processes related to
4 prime broker affirmation with internal andexternal stakeholders
5

Schedule and execute process changes forprime broker affirmation

154

Activities to Assess Liquidity and Collateral Management#

Implementation Steps

1

Determine if strategies, policies, or practices tomanage liquidity risk need to change based on
the shortened settlement cycle2

Determine impacts to projection of cash flows

3

Determine if T+1 settlement will impact thecollateral management process4

Determine if changes to collateral management
systems are required due to shortened
settlement cycle

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Activities to Assess Forex Considerations and Funding#

Implementation Steps

1

Identify changes to market
synchronization for T+1 settlement cycle

2

Assess impact of market synchronization
changes to foreign exchange and funding

3

Determine changes required due to T+1
implementation

4

Coordinate identified changes with internaland external stakeholders

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

5 Schedule and execute identified changes

Activities to Assess Intraday & End of Day DTCC Settlement Processing#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to intraday & end of day DTCC
1
settlement processing are included ininventories for configuration
2 Examine upstream system, data, and processchanges to ensure that they do not interfere
155

Activities to Assess Intraday & End of Day DTCC Settlement Processing#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systemswith intraday & end of day DTCC settlement
processing
3

Determine process changes required for
intraday & end of day DTCC settlement

Coordinate changes to processes related to
4 intraday & end of day DTCC settlement withinternal and external stakeholders
5

Develop test plans for intraday & end of day
DTCC settlement processing

6

Schedule and execute process changes for
intraday & end of day DTCC settlement

Activities to Review Processes for Global Considerations#

1

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Identify changes to market synchronization
for T+1 settlement cycle

Assess impact of market synchronization
changes to foreign exchange, foreign
2 investment, and cross-border transaction
processing, procedures, and policy
documentation
3

Review issuance and cancellation procedures
around ADR processing

4

Determine changes required due to T+1
implementation

5

Coordinate identified changes with internal andexternal stakeholders

6 Schedule and execute identified changes

156

Activities to Assess Options Exercise and Assignment Processes#

Implementation Steps

1

Inventory exercise and assignment processes
and documentation (completeness check)

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Ensure that systems and reference data
related to options exercise and assignment2
are included in inventories forconfiguration
3

Assess the impact of required changes to
upstream and downstream systems

Determine responsibility for exercise and4 assignment changes (proprietary vs. externalvendor and service bureau)
5

Coordinate changes with internal and external
stakeholders

6 Develop exercise and assignment test plans
7

Schedule and execute system, process, anddocumentation changes

Activities to Assess Primary Offerings#

Implementation Steps

1

Determine required changes for primaryofferings required for migration to T+1

2

Accelerate documentation procedures
required to close primary offerings

3

Coordinate changes with internal andexternal stakeholders

4

Develop test plans to check the robustness ofthe system in handling operational issues

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Schedule and execute new systems for
5 primary offerings to cater to the newcompressed timeframe of T+1

157

Activities to Assess Reconciliation Processes for Errors/Fails#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Determine the redundant manual
1 touchpoints and illiquid securities in thecurrent system
2

Automate the processes and streamline
communication channels

3

Ensure seamless flow of trade instruction
from one counterparty to another4 Coordinate changes amongst all stakeholders
5 Test the new systems in place
6 Schedule and execute system changes

Activities to Assess Buy-Side Considerations#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

Revisit the internal processes, begin impact
1 analysis, and look for investment
opportunities that can accelerate change
2

Identify processes that can be automated andcontrols that need to be updated

Update systems to incorporate new
3 recordkeeping changes related to trade
allocation, affirmation, and confirmation
4

Schedule and execute system, process, anddocumentation changes

5

Test the processes and assess to solve
outstanding issues

158

Activities to Draft Test Plan#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1 Draft test plan
Confirm readiness with vendors and service
2 bureaus to determine static data andsoftware field updates for internal systems
3 Develop internal testing scenarios and data
4 Conduct internal testing and evaluate results
5

Coordinate external testing with internal andexternal stakeholders

6 Conduct external testing and evaluate results
7

Develop the organization’s plan to participate
in industry testing

8

Participate (if applicable) in DTCC testing prior
to industry test

9 Conduct post-migration testing activities

13.10 Dimensions Tables
The dimensions detailed below should be considered for trade processing:
Dimension

Impacted?

Business Model

Potential
ImpactProduct Type

Potential
ImpactVendor & Service
Bureau Support

Potential
ImpactDescription
Changes in the trade processing lifecycle are not expected tohave a large impact on organization’s business models. Theremay exist staffing work considerations. Tooling to automate
these processes may require different skill set requirements
for teams.
In-scope products should be evaluated, and trading processes
and systems should be configured for T+1 settlement toaccount for various product types correctly (e.g., fixed income
vs. equities).
Vendors and service bureaus should configure trading systems
for T+1 settlement in order to avoid risk (e.g., financial,
reputational) to their customer organizations.
159

Dimension
Trading Venue

Risk & Compliance

CustomerExperience

Technology
Enablers

Impacted?
None
Potential
ImpactDescription
Trading venues are not likely to be changed or largely
impacted by trade processing with a T+1 settlement.
Organizations that do not properly transform trade processes
and relevant systems for the new settlement period may
compromise the ability to execute and settle trades inaccordance with regulatory guidance.

Potential
ImpactIncorrectly configured trade processes and systems may cause
upstream and downstream implications for internal functions(e.g., reconciliation, income processing) and impact externalclients (e.g., client statements, trade confirmations). Issues
may also result in failed trades for external customers.
Organizations should consider the customer experience anduser interface continuity when scheduling trading systemchanges.

Potential
ImpactOrganizations’ trading systems should prepare for settlement
date configuration errors that may arise and impact upstream
and downstream functions that rely on information from thetrading systems.

The dimensions detailed below should be considered for asset servicing:
Dimension

Impacted?

Business Model

None

Product Type

Potential
ImpactVendor & Service
Bureau Support

Potential
ImpactDescription
Changes related to asset servicing functions are not expected tohave a large impact on organizations’ business models.
Impacted products could experience income payment errors
and operational issues if T+1 ruled ex-dates are not updated forT+1. This requires organizations to evaluate and enhancecurrent-state announcements with ex-dates, notification
announcement processes for all corporate actions and due billprocessing. In addition, businesses should determine theimpact a shortened cover/protect period has on theirprocesses.
In order to minimize risk to their customer organizations,vendors and service bureaus should properly update processes
and systems related to ex-dates and cover/protect dates on
their event announcements. This includes reviewing andenhancing if necessary, data sources, notification
announcements, due bill processing, interim accounting
processes, liabilities related to reorganization events and stock
record balances.
160

Dimension

Impacted?

Trading Venue

Potential
ImpactRisk & Compliance

Potential
ImpactCustomerExperience

Technology
Enablers

Description
Trading venues that do not properly update their rule set toestablish the ex-date for listed securities could cause risk (e.g.,security pricing, entitlements, out of balances, etc.) toparticipating organizations.
Risk (e.g., financial, reputational) and compliance issues related
to corporate actions (e.g., dividends, stock splits) may occur if
ex-date entitlements, notifications, and data are not updated toreflect the shortened settlement cycle. The DTC interim
account processes should be updated in order to prevent any
issues related to due bill processing. In regard to cover/protect
period following an event expiration, organizations should
review and modify reorganization announcements, inclusive ofvoluntary reorganization instruction applications, internal
processing systems responsible for passing liabilities from one
party to another, and the stock record platform to account for
positions in different “boxes.”

Potential
ImpactIncorrect ex-dates or interim accounting data may cause
upstream and downstream implications for internal functions(e.g., reconciliation, income processing) and impact externalclients (e.g., client statements, processing errors).
Organizations face financial and reputational risk with incorrect
ex-dates causing erroneous pricing and the incorrect party
receiving the distribution proceeds. The passing of liabilities
related to voluntary reorganization event expirations including
cover/protect date processing should be updated for internalfunctions in order to avoid impacting clients (e.g., missing
elections to participate in voluntary corporate action events,
financial loss, etc.).

Potential
ImpactOrganizations should evaluate and, if necessary, enhance
technology platforms that support corporate action
announcements, pricing, and stock records (i.e., passing ofliabilities).

The dimensions detailed below should be considered for documentation:
Dimension

Impacted?

Business Model

None

Product Type

Potential
ImpactDescription
Changes in the documentation are not expected to have alarge impact on organization’s business models.
Impacted products and related services could be
misrepresented to clients if documents that reference in-scopeproducts are not updated for T+1.
161

Dimension

Impacted?

Description
Vendors and service bureaus that do not properly update
documentation provided to their customer organizations or
those organization's clients could cause risk (e.g., financial,
reputational, and regulatory) to those organizations.

Vendor & Service
Bureau Support

Potential
ImpactTrading Venue

Potential
ImpactReferences to the T+2 settlement cycle in the operatingprocedures and internal control documentation will not alignto updated rules of trading venues.

Risk & Compliance

Potential
ImpactRisk (e.g., financial, reputational) and compliance issues
related may occur if documentation is not updated to reflect
the shortened settlement cycle.

Customer Experience

Potential
impactIncorrect documentation may cause reputational damage toan organization and impact clients by potential
misinformation. Potential fines and financial liabilities could
result from client losses on actions that were based on
misinformation from inaccurate documentation. In addition, it
is important to have controls in place for documentation
procedures. E-delivery can help with risk management.

Technology Enablers

Potential
ImpactIssues may occur across an organization's technology
platforms if reference data and systems that populate
documentation are not comprehensively updated for T+1.

The dimensions detailed below should be considered for securities lending:Dimension

Impacted?

Business Model

Potential
ImpactProduct Type

Potential
ImpactVendor & Service
Bureau Support

Potential
ImpactTrading Venue

None

Risk & Compliance

Potential
ImpactDescription
Changes in the securities lending processes are not expected tohave a large impact on an organizations’ business models but
should be evaluated.
In-scope products should be evaluated, and processes andsystems should be configured for T+1 settlement to account forvarious product types (e.g., fixed income vs. equities) correctly.
Vendors and service bureaus that do not properly update
securities lending processes and procedures provided to theircustomer organizations could cause risk (e.g., operational,
financial, and reputational) to those organizations. Vendors andservice bureaus should configure systems for T+1 settlement inorder to avoid risk (e.g., financial, reputational, settlement).
Trading venues are not likely to be changed or largely impacted
by securities lending with a T+1 settlement.
Risk (e.g., operational, financial, reputational) and complianceissues (e.g., licensing exams) may occur if securities lending
processes are not updated related to the T+1 settlement cycle.
162

Dimension

Impacted?

CustomerExperience

None

Technology
Enablers

Potential
ImpactDescription
The IWG determined minimal risk with a move to T+1.
Organizations should perform a risk assessment.
Issues may occur across an organization's technology platforms
if securities lending processes (processes and timing related tostock loan, margin calculation) and procedures are outdated.

The dimensions detailed below should be considered for prime brokerage:
Dimension

Impacted?

Business Model

None

Product TypeNone

Vendor & Service
Bureau Support

Potential
ImpactTrading Venue

None

Risk & Compliance

CustomerExperience

Technology
Enablers

Potential
ImpactDescription
Changes in the prime brokerage are not expected to have an
impact on organizations’ business models.
In-scope products should be evaluated to identify potential
impacts as applicable, and processes and systems should be
configured for T+1 settlement to account for various producttypes (e.g., fixed income vs. equities) correctly.
Vendors and service bureaus that do not update prime
brokerage processes and procedures to align with
anticipated, updated regulatory guidance could pose risk to
the broker-dealer. Vendors and service bureaus should
configure systems and operational procedures to align toregulatory- and industry-imposed operational deadlines andrequirements.
Trading venues are not likely to be changed or largely
impacted related to the operational changes proposed.
Organizations should evaluate how operational changes
related in response to updated regulatory guidance
implicates their overall risk/compliance oversight programs.

Potential
ImpactRequirements by customers or EBs to adhere to modified
service-level agreements (SLAs) or updated procedures
related to onboarding agreements in order to meet modified
regulatory and/or industry-imposed deadlines may be
implicated. Organizations should evaluate how these changes
may impact the customer experience.

Potential
ImpactOperational and technical issues may arise if technology
platforms and related processes are not updated to meet
regulatory- or industry-imposed deadlines (e.g., resolution of
trade mismatches, delivery to CNS within specific timelines,
reduction in straight-through processing).

163

The dimensions detailed below should be considered for funding and liquidity considerations:
Impacted?

Description

Business Model

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Product TypeNone

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Potential
ImpactVendors and service bureaus that do not properly update
funding, liquidity and collateral management processes andprocedures provided to their customer organizations could
cause risk (e.g., operational, financial, and reputational) to
those organizations. Vendors and service bureaus should
configure systems for funding and collateral management inorder to avoid risk (e.g., financial, reputational, settlement).

Dimension

Vendor & Service
Bureau Support

Trading Venue

Risk & Compliance

None

Potential
ImpactTrading venues are not likely to be changed or largely impacted
by funding and collateral management process with a T+1
settlement.
Risk (e.g., operational, financial, reputational, settlement) andcompliance issues (e.g., licensing exams) may occur if
operational processes are not updated related to the T+1
settlement cycle.

CustomerExperience

Potential
ImpactLiquidity and collateral management issues (e.g., insufficientcollateral, securities lending errors, and missed obligations)
may impact external clients and cause risk (e.g., financial,
reputational).

Technology
Enablers

Potential
ImpactIssues may occur across an organization's technology platforms
if systems and data related to liquidity and collateralmanagement are not comprehensively updated.

The dimensions detailed below should be considered for global considerations:
Dimension

Impacted?

Business Model

Potential
ImpactProduct Type

Potential
ImpactSummary of Risk
Due to the shortened settlement cycle, coordinated efforts
need to be taken wholesale FX market participants tointroduce T+1 settlement without disruption, particularly for
non-U.S. based investors given time zone differences.
Global considerations could experience operational andsettlement issues if trade discrepancies are discovered on T+1
and global parties are unable to pre-fund the trade.

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus that do not properly updateprocesses for global market participants and data provided to164

Dimension

Impacted?

Summary of Risk
their customer organizations could cause risk (e.g., financial,
reputational) to those organizations.

Trading Venue

Potential
ImpactInability to pre-fund the trade by foreign investors may deter
them to trade in U.S. financial markets.

Risk & Compliance

Potential
ImpactRisk (e.g., operational, financial, and reputational) andcompliance issues may occur if processes related to global
considerations are not properly configured for T+1.

Customer Experience

Potential
ImpactIncorrectly updated global market processes may cause
upstream and downstream implications for internal functions(e.g., reconciliation, deliveries) and impact external clients(e.g., failed trades).

Technology Enablers

Potential
ImpactIssues may occur across an organization's technology
platforms if systems and data related to global markets are notcomprehensively updated.

The dimensions detailed below should be considered for options exercise and assignment processassessment
Dimension

Impacted?

Summary of Risk

Business Model

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Product Type

Potential
ImpactUnderlying securities could experience operational andsettlement issues if settlement dates are not adjusted for T+1.

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus that do not properly update
options exercise and assignment operations and data provided
to their customer organizations could cause risk (e.g., financial,
reputational) to those organizations.

Trading Venue

Potential
ImpactOptions exercise and assignment processes not properly
updated for T+1 settlement could cause out of balances with
the Options Clearing Corporation (OCC).

Risk & Compliance

Potential
ImpactRisk (e.g., operational, financial, and reputational) andcompliance issues may occur if options exercise andassignment processes are not properly configured for T+1.

Customer Experience

Potential
ImpactIncorrectly updated options exercise and assignment
processes may cause upstream and downstream implications
for internal functions (e.g., reconciliation, deliveries) and
impact external clients (e.g., failed trades).

Technology Enablers

Potential
ImpactIssues may occur across an organization's technology
platforms if options exercise and assignment processes and165

Dimension

Impacted?

Summary of Risk
options settlement data configuration are notcomprehensively updated.

The dimensions below should be considered for primary offerings:
Dimension

Impacted?

Summary of Risk
Primary equity offerings are document intensive. Usually, thedelivery of final prospectuses and various other documents inthe current T+2 cycle occurs on the morning of settlement. The
final prospectus is unlikely to be delivered prior to thesettlement of the T+1 offering. Consolidated efforts need to bemade to the model to accommodate for unanticipateddocumentation issues for a smooth transition to T+1.

Business Model

Potential
ImpactProduct Type

Potential
ImpactPrimary offering process could experience operational andsettlement issues if current documentation and exception
management processes are not adjusted for T+1.

Vendor & Service
Bureau Support

Potential
ImpactServices that fail to accommodate any documentation
exceptions of primary offerings seamlessly will lead to hiccups
in the settlement cycle

Trading Venue

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Potential
ImpactOperational risks are heightened due to a compressed
timeframe that provides virtually no time to addressunanticipated issues that may arise in primary offerings

Customer Experience

Potential
ImpactAny unanticipated delays in documentation and inability offoreign banks to pre-fund the nominal amount/par value (inlocal currency) to the company in order for the company tothen register the share capital increase with the local registerwould cause inconvenience for foreign investors.

Technology Enablers

Potential
ImpactIssues may occur across an organization's technology
platforms if systems and data related to primary offerings are
not comprehensively updated.

Risk & Compliance

The dimensions below should be considered to reconcile errors/fails:
Dimension

Impacted?

Business Model

Potential
ImpactSummary of Risk
With the compressed timeline, manual processes should be
automated so that the settlement instruction delivered tocustodians by brokers is error-free and to eliminate
discrepancies between buyer and seller.
166

Dimension

Impacted?

Product Type

Potential
ImpactSummary of Risk
Processes should be standardized and automated to mitigate
risks pertaining to data quality and integration with trade
processes.

Vendor & Service
Bureau Support

Potential
ImpactVendors can offer robust exception management services to
identify and handle errors and fails in the accelerated
settlement cycle.

Trading Venue

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Risk & Compliance

Potential
ImpactFailure to handle SSI mismatches and standardizing cancelling
and rebilling of trades would create compliance issues andincrease the quantum of failed trades.

Customer Experience

Potential
ImpactReliance on legacy systems can deter the process of timely
allocation of trades for customers.

Technology Enablers

Potential
ImpactInability of customers to update their SSI on automatedsystems or updating instructions just before the settlement in
the system would risk the data quality and integrity.

The dimensions below should be considered for buy-side considerations:
Dimension

Impacted?

Business Model

Potential
ImpactProduct Type

Potential
ImpactVendor & Service
Bureau Support

Potential
ImpactTrading Venue

None

Risk & Compliance

Potential
ImpactSummary of Risk
Final rule shifts the recordkeeping and record retention
obligation to the investment managers to keep records of all
steps of allocation, affirmation, and confirmation.
Buy side participants will have to identify processes andcontrols that can be automated and updated for them toremain effective.
Services that fail to properly record and retain information
about trade allocation, affirmation, and confirmation as per the
proposed change under T+1 could cause inconvenience forcustomers’ trades. T+1 will require documentation language
updates that will impact resourcing and delivery processes(including the associated technology vendors) for buy-side.
Minimal to no risk has been identified for trading venue.
Governance and escalation frameworks need to be in place toensure compliance to the new final rule. Having a bespoke
program in place to understand how best changes in the newaccelerated cycle can be incorporated will be key.
167

Dimension

Impacted?

Customer Experience

Potential
ImpactTechnology Enablers

Potential
ImpactSummary of Risk
The failure to comply with the new proposed changes of record
keeping and retention by buy-side firms may impact the timely
allocation, affirmation, and confirmation of trades of thecustomer.
Firms should look for technology solutions that can assist themto get to T+1 by analyzing their internal processes to adhere to
the new timeline changes in the settlement cycle.

The dimensions detailed below should be considered for regulatory changes:
Dimension
Business Model

Impacted?
None

Summary of Risk
The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Product Type

Potential
ImpactVarious product types (e.g., equities, fixed income, mutual
funds, and derivatives) should be reviewed to ensure thatsystems and data linked to these product types support
upstream and downstream changes for the shortened
settlement period.

Vendor & Service
Bureau Support

Potential
ImpactVendors and service bureaus that do not properly apply rulechanges could cause risk (e.g., operational, financial, andreputational) to their customer organizations.

Trading Venue

None

The IWG determined no or minimal risk. Organizations should
perform a risk assessment.

Risk & Compliance

Potential
ImpactRisk (e.g., operational, financial, and reputational) andcompliance issues may occur if rule changes are not properly
applied for T+1 settlement.

CustomerExperience

Potential
ImpactIncorrectly applied rule changes may impact external clients(e.g., failed trades) and cause risk (e.g., operational, financial,
and reputational).

Potential
ImpactIssues may occur across an organization's technology
platforms if rule changes are not comprehensively applied,potentially resulting in risk (e.g., operational, financial, andreputational).

Technology Enablers

The dimensions detailed below should be considered related testing and migration:
Dimension
Business Model

Impacted?
None

Summary of Risk
The IWG determined no or minimal risk. Organizations should
perform a risk assessment.
168

Dimension
Product Type

Impacted?
Potential
ImpactSummary of Risk
Trades involving various securities could process incorrectly or
fail if testing is not comprehensive across product types.
Vendors and service bureaus that do not properly test
systems, data, and processes provided to their customer
organizations could cause risk (e.g., operational, financial, andreputational) to those organizations.

Vendor & Service
Bureau Support

Potential
ImpactTrading Venue

Potential
ImpactRisk & Compliance

Potential
ImpactCustomer Experience

Potential
ImpactInsufficient testing may cause upstream and downstream
implications for internal functions and impact externalcustomers.

Technology Enablers

Potential
ImpactIncomplete testing of an organization's technology platforms
may lead to operational issues across internal functions and an
inability to implement the shortened settlement lifecycle.

Test plans will need to be developed for each trading venue
included in industry testing.
Risk (e.g., operational, financial, and reputational) andcompliance issues may occur if systems, data, and processes
are not included in test plans and testing is not fully executedfor T+1 settlement.

13.11 Regulatory Bodies 49
Regulatory Bodies
BATS Global Markets (BATS)
BATS Y-Exchange (BYX)
Board of Trade of the City of Chicago (CBOT)
Boston Stock Exchange Clearing Corporation (BSECC)
BOX Options Exchange, LLC (BOX)
C2 Options Exchange (C2)
CBOE Futures Exchange (CFE)
Chicago Board Options Exchange (CBOE)
Chicago Mercantile Exchange (CME)
Chicago Mercantile Exchange (CME)49

The list is not meant to be comprehensive of all regulatory bodies.

169

Regulatory Bodies
Chicago Stock Exchange (CHX)EDGA Exchange (EDGA)
EDGX Exchange (EDGX)
Federal Reserve (FED)
Financial Industry Regulatory Authority (FINRA)
Fixed Income Clearing Corporation (FICC)
Formerly American Stock Exchange (Amex)
Formerly Boston Stock Exchange (BSE)
Formerly National Association of Securities Dealers (NASD)
Formerly NYSE Alternext US (NYSEALTR)
Formerly NYSE Amex (NYSEAmex)
Formerly Topaz Exchange (Topaz)Intercontinental Exchange Clear Credit (ICC)
Intercontinental Exchange Clear Europe (ICEEU)
International Securities Exchange (ISE)International Securities Exchange Gemini (ISEGemini)
Miami International Securities Exchange LLC (MIAX)
Municipal Securities Rulemaking Board (MSRB)
National Association of Securities Dealers Automated Quotation Stock Market (NASDAQ)
NASDAQ OMX BX (BX)
NASDAQ OMX PHLX (PHLX)
National Futures Association (NFA)
National Securities Clearing Corporation (NSCC)
National Stock Exchange (NSX)New York Stock Exchange (NYSE)New York Stock Exchange Archipelago (NYSEArca)
New York Stock Exchange MKT (NYSEMKT)NQLX (formerly registered)170

Regulatory Bodies
OneChicago (OC)Securities Exchange Commission (SEC)
Stock Clearing Corporation of Philadelphia (SCCP)The Depository Trust Company (DTC)
The Options Clearing Corporation (OCC)

13.12 Sample Implementation Activities Table
Sample Implementation Activities Table#

Implementation Steps

Organization Participants(Front, Middle, Back, IT, Vendor)

Supporting
Systems

1
2
3
4
5
6
7
8

13.13 Sample Dimensions Table
Dimension

Impacted?

Description

Business Model
Product Type
Vendor & Service
Bureau Support
171

Dimension

Impacted?

Description

Trading Venue
Risk & Compliance
CustomerExperience
Technology
Enablers

13.14 T+1 Settlement Trade Flow

13.15 T+1 Trade Processing Flow Chart172

13.16 FX and Securities Timeline

13.17 DTCC Operational Timeline173

14 Glossary
Glossary
Term

Automated Clearing House

American Depositary Receipt

Authorized Participant

Corporate Bonds,
Municipal Bonds, and Unit
Investment Trusts

Continuous Net Settlement

Don’t Know

Deliver Order

Dividend Reinvestment Plan

Acronym

ACH

ADR

AP

CMU

CNS

DK

DO

DRIP

Description
Automated Clearing House (ACH) is an electronic
network for financial transactions in the UnitedStates. ACH processes large volumes of credit anddebit transactions in batches. ACH credit
transfers include direct deposit, payroll, andvendor payments.
A negotiable security issued by a U.S. bankrepresenting ownership in a foreign stock that istraded on a U.S. exchange.
One of the major parties at the center of thecreation and redemption process for exchangetraded funds (ETF).
Refers to the products corporate bonds,
municipal bonds, and unit investment trusts.
CNS is NSCC’s core accounting and securities
settlement system, where compared andrecorded transactions in eligible securities arenetted.
An expression for an out trade that is used
when there is a discrepancy in the details of a
trade.
An instruction for the book-entry transfer of asecurity from one participant to another; a DO
may be free of payment or versus payment (a“DVP”). DTC also processes several other types of
DOs (e.g., stock loans, customer accounttransfers (ACATS)).
A plan offered by a corporation whereby
investors’ dividends are directly reinvested in theunderlying equity on the dividend payment date.

174

Glossary
Term

Direct Registration System

The Depository
Trust Company

The Depository Trust& Clearing
Corporation

Envelope Settlement Service

Exchange-Traded FundFederal Deposit
Insurance Company

Fixed Income
Clearing Corporation

Acronym

DRS

DTC

DTCC

ESS

ETF

FDIC

FICC

Description
A system that enables investors to elect to holdtheir assets on the books and records of theirtransfer agent in electronic book-entry form.
Through DTC’s DRS service, assets can beelectronically transferred to and from thetransfer agent and broker-dealer.
One of the world's largest securities depositories
that provides safekeeping through electronic
recordkeeping of securities balances. It also acts
like a clearinghouse to process and settle tradesin corporate and municipal securities.
The Depository Trust & Clearing Corporation is an
US post-trade financial services company
providing clearing and settlement services to thefinancial markets.
A DTCC service that standardizes and controls
participant-to-participant physical delivery of
securities in the New York metropolitan area.
An investment company, typically a mutual fundor unit investment trust, whose shares are tradedintraday on stock exchanges at marketdetermined prices. Investors may buy or sell ETF
shares through a broker just as they will theshares of any publicly traded company.
The Federal Deposit Insurance Corporation (FDIC)
is an independent agency created by theCongress to maintain stability and publicconfidence in the nation's financial system.
An agency that deals with the confirmation,
settlement, and delivery of fixed-income assets in
the U.S. The agency ensures the systematic andefficient settlement of U.S. Government
securities and mortgage-backed security
transactions in the market.

175

Glossary
Term

Financial Industry
Regulatory Authority

Financial
Information
Exchange

Foreign Exchange

Investment Company InstituteAcronym

FINRA

FIX

FX

ICI

Description
A regulatory body created after the merger of the
National Association of Securities Dealers and the
New York Stock Exchange's regulationcommittee. The Financial Industry Regulatory
Authority is responsible for governing businessbetween brokers, dealers, and the investing
public.
A protocol system used by funds, investment
managers, and firms. FIX systems are used totransfer accurate and timely financial information
regarding securities trades through and acrosssecurity exchange houses, enabling users to maketimely and accurate decisions.
The exchange of one currency for another, or theconversion of one currency into anothercurrency.
ICI is a leading, global association of regulated
funds, including mutual funds, ex- change-tradedfunds (ETFs), closed-end funds, and unit
investment trusts (UITs) in the United States andsimilar funds offered to investors in jurisdictions
worldwide. ICI seeks to encourage adherence tohigh ethical standards, promote public
understanding, and otherwise advance theinterests of funds, their shareholders, directors,
and advisers.
The ISC provides guidance, direction, and support
for the effort to migrate to a T+1 settlement
cycle.

Industry Steering Committee

ISC

International Swaps andDerivatives Association

ISDA

A trade organization of participants in the market
for over-the-counter derivatives.

ISLA

The International Securities Lending Association
is a trade association established in 1989 torepresent the common interests of participants inthe securities lending industry.

International
Securities Lending
Association

176

Glossary
Term

AcronymDescription

Institutional Trade
Processing

DTCC’s Institutional Trade Processing (ITP) service
suite has its origins in the set of trade processing
solutions that constituted the Omgeo business.
Combining DTCC’s global solution for legal entity
identifiers and its settlement capabilities with theformerly Omgeo-branded pre-trade andmatching services, ITP offers buy-side, sell-side,
and custodian firms an end-to-end straightthrough-processing solution for their trading
activity.

Industry Working GroupIWG

The IWG supports the ISC by identifying thebusiness requirements, rule changes, andrecommending next steps for the industry
initiative.

MSLA

An agreement for use when parties may enter
into transactions in which one party (a “Lender”)
will lend to the other party (a “Borrower”) certain
securities against a transfer of collateral.

ITP

Master Securities
Loan Agreement

Municipal
Securities
Rulemaking Board
National Association of
Securities Dealers
Automated Quotation Stock
MarketNational Securities
Clearing Corporation

MSRB

NASDAQ

NSCC

A regulating body that creates rules and policies
for investment firms and banks in the issuing andsale of municipal bonds, notes and othermunicipal securities by states, cities, andcounties.
A global electronic marketplace for buying andselling securities, as well as the benchmark index
for U.S. technology stocks.
A subsidiary of the Depository Trust & Clearing
Corporation (DTCC) that provides centralized
clearing, risk management, information, andsettlement services to the financial industry. The
NSCC offers multilateral netting so that brokers
can offset buy and sell positions into a single
payment obligation, thereby reducing financial
exposure and capital requirements.

177

Glossary
Term

New York Stock Exchange

Office of the Comptrollerof the Currency

The Options Clearing
Corporation
Participant Subscription
Offer Program
Participant Tender
Offer Program
Qualified Special
Representative

Real Time Trade Matching

Securities andExchange Commission

The Securities Industry and
Financial Markets
Association

Self-Regulatory Organizations

AcronymDescription

NYSE

A stock exchange based in New York City, whichis considered the largest equities-based exchange
in the world based on total market capitalizationof its listed securities.

OCC

OCC

PSOP

PTOP
QSR

RTTM

The OCC charters, regulates, and supervises allnational banks and federal savings associations aswell as federal branches and agencies of foreignbanks. The OCC is an independent bureau of the
U.S. Department of the Treasury.
An organization that acts as both the issuer andguarantor for option and futures contracts.
DTC’s PSOP processor allows participants toprocess information regarding rights offerings
including subscriptions.
DTC’s PTOP processor allows participants toprocess information regarding tender andexchange offers.
Participants of NSCC to validate and report equity
transactions submitted to NSCC.
NSCC’s RTTM system enables broker-dealers toautomate the processing of fixed income
securities traded throughout the trading day.

SEC

The SEC is an agency of the U.S. Federal
Government. Its primary mission is to protect
investors, maintain fair, orderly, and efficient
markets, and facilitate capital formation.

SIFMA

SIFMA is the voice of the nation’s securities
industry, bringing together the shared interestsof hundreds of broker-dealers, banks, and asset
managers.

SRO

An organization that exercises some degreeof regulatory authority over an industry or
profession. The regulatory authority could beapplied in addition to some form ofgovernment regulation, or it could fill the178Glossary
Term

AcronymDescription
vacuum of an absence of government
oversight and regulation.

Standing
Settlement
Instruction

Society for
Worldwide Interbank
Financial
Telecommunications
Trade OrderManagement Solution

Unit Investment Trust

Universal Trade Capture

SSI

SWIFT

TOMS

UIT

UTC

Settlement instructions governing the delivery offinancial instruments between two
counterparties.
The Society for Worldwide Interbank Financial
Telecommunication provides a network thatenables financial institutions worldwide to send
and receive information about financialtransactions in a secure, standardized, andreliable environment.
An order management system, or OMS, is acomputer software system used in a number ofindustries for order entry and processing.
A type of fund with some characteristic of mutual
funds and some of closed -end funds. Like mutual
funds, UITs issue redeemable shares. Like closedend funds, however, UITs typically issue only aspecific, fixed number of shares. A UIT does not
actively trade its investment portfolio, insteadbuying and holding a set of particularinvestments until a set termination date, at whichtime the trust is dissolved and proceeds are paid
to shareholders.
A DTCC service that validates and reports equity
transactions that are submitted to NSCC by anexchange or by Qualified Special Representatives(QSRs) that is an NSCC Member.

179

Revision History
Version
1.0
1.1

Publish Date
08/01/2022
12/14/2022

1.2

04/19/2023

1.3
1.4

07/12/2023
12/05/2023

Description
Initial publication
Section 6. Securities Lending was updated to include a
new best practice recall cutoff time of 11:59 PM on
trade date. Additionally, minor language andformatting changes can be found throughout the
document, including in Section 7. Prime Brokerage.
Updated to reflect the SEC Final Rule release on
February 15, 2023.
Added sections: 5.3.4.A. Policies and Procedures and11.3.1.C. Testing Dimensions
Updated 13.7 T+1 Trade Processing Comparison Chart
Updated to reflect industry updates
Updated: Securities Lending, Prime Brokerage,
Funding and Liquidity Considerations, Global
Considerations, Options Exercise and Assignment
Reconciliation for Errors/Fails, Regulatory Changes (toinclude FINRA publishing)
Added FX and Securities & DTCC Operational Timelines

180

The information in this Playbook was prepared by Deloitte & Touche LLP (Deloitte) and commissionedby the Securities Industry and Financial Markets Association (SIFMA) and the Investment Company
Institute (ICI).
This Playbook contains general information only and SIFMA, ICI, and Deloitte are not, by means of thisdocument, rendering accounting, business, financial, investment, legal, tax, or other professional
advice or services. SIFMA, ICI, and Deloitte make no representation or warranty to the accuracy of theinformation. In addition, the discussion and examples presented in this Playbook are for educational
purposes. They are not to be viewed as an authoritative statement on the quality and/or
appropriateness of an individual organization’s practices. Deloitte provides no assurance over theaccuracy or completeness of the requirements for any particular organization’s readiness. This
Playbook is meant to provide a framework to assist organizations in performing their own analysis.
Before making any decision or taking any action that may affect your organization, you should consult
a qualified professional advisor. SIFMA, ICI, and Deloitte shall not be responsible for any loss sustainedby any person who relies on this Playbook.
While DTCC is not an author of this Playbook, DTCC provided consulting support for SIFMA and ICI in
preparing this Playbook.
This Playbook contains general information only, and DTCC is not, by means of this document,
rendering accounting, business, financial, investment, legal, tax, or other professional advice orservices. The information presented in this Playbook is for educational purposes only. DTCC makes norepresentation or warranty to the accuracy of the information and the information in this Playbook is
not to be viewed as an authoritative statement on the quality and/or appropriateness of an individualorganization’s practices.
DTCC provides no assurance over the accuracy or completeness of the requirements for any particularorganization’s readiness. This Playbook is meant to provide a framework to assist organizations in
performing their own analysis. Before making any decision or taking any action that may affect yourorganization, one should consult a qualified professional advisor. DTCC shall not be responsible for any
loss sustained by any person who relies on this Playbook.

181