Buy-side flock to automated trade affirmation service from DTCC ahead of T+1 transition

Market infrastructure says 350 investment managers are now leveraging CTM’s automated trade affirmation capabilities, while uptake of Match to Instruct (M2i) workflow with a broker/dealer counterpart has nearly doubled.

The Depository Trust & Clearing Corporation (DTCC) has revealed that 350 Investment managers are now leveraging CTM’s automated trade affirmation capabilities to accelerate the post-trade lifecycle, as firms prepare for the US move to T+1 trade settlement.

The number of buy-side firms who also leverage CTM’s Match to Instruct (M2i) workflow with a broker/dealer counterpart has increased by 91% since the start of 2023. DTCC said those clients are achieving a near 100% same-day affirmation (SDA) rate by 9pm on trade date. Achieving SDA is critical to meeting US T+1 settlement timelines.

The adoption of CTM’s M2i workflow – which involves subscriptions to CTM, TradeSuite ID, and SSI enrichment via ALERT – helps clients achieve T+1 settlement, as it automatically triggers trade affirmation and the delivery of instructions for DTC-eligible securities directly to the Depository Trust Company (DTC) for settlement when a trade match occurs between an investment manager and an executing broker. 

By automating the allocation, confirmation and affirmation processes, clients can significantly reduce the time required to stage trades for settlement at the DTC. 

“It is exciting to see the industry embrace CTM and other DTCC ITP services as critical enablers of T+1,” said Val Wotton, managing director and general manager of DTCC Institutional Trade Processing. 

“Clients utilising CTM benefit from central matching and auto-affirmation capabilities that accelerate the trade lifecycle and are often more efficient when compared to local matching and affirmation by the custodian or institution. With the global financial services industry preparing for the US move to T+1, adoption of CTM and the auto-affirmation workflows continues to increase, along with the realisation of its benefits to market participants.”

DTCC has also released a new T+1 scorecard, available through its ITP Data Analytics service. The scorecard allows CTM clients to view the timeliness and efficiency of their operational processes through the lens of T+1. The scorecard compiles underlying trade data and provides a dashboard interface with industry benchmarks, trend analysis, and operational metrics such as total trade volume submitted, timeliness of parties submitting trades in CTM, number of manual touches, and timeliness of affirmations by the affirming party.

DTCC also said it will expand its trade archival service ahead of the T+1 implementation for subscribing CTM clients to meet their recordkeeping obligations as a Registered Investment Adviser (RIA) early in 2024.

The requirements set forth by the US Securities and Exchange Commission (SEC) adopted amendments to Rule 204-2. The Rule 204-2 amendment requires RIAs that are parties to any transactions subject to the requirements of Rule 15c6-2 (e.g. transactions with SEC-registered brokers subject to SDA) to make and keep records of confirmations received, and allocations and affirmations sent, each with a date and time stamp.

“Given the number of post-trade functions that are impacted by T+1, it is critical that market participants gain an in-depth understanding of their operational efficiency and recordkeeping obligations as soon as possible,” added Wotton.

“We stand ready to help the industry successfully navigate this move, as we have done for earlier accelerations of the settlement cycle, and in offering best practice solutions to both aid in compliance as well as deliver new benefits.”