Industry testing for T+1 is progressing well, the DTCC has confirmed, with strong involvement across market participants.
Speaking on a SIFMA webinar in collaboration with the Association of Global Custodians (AGC), David Kirby, executive director, Americas relationship management and global account management at the DTCC, said that aside from some “minor setup issues”, testing has gone how firms have expected it to go.
The testing schedule began in August 2023, providing industry players with nine months and 21 cycles of testing ahead of the switch to the shortened settlement cycle in May 2024.
“The overarching theme behind all the testing is we haven’t come up with a showstopper yet,” said Kirby. “We’re 10 cycles in and we haven’t come up with that ‘oh shoot’ moment where people are caught off guard. We’re seeing a lot of activity and it’s positive, so it leaves us with a pretty comfortable feeling from the mechanics behind it all.”
Regarding NSCC and DTC testing, Kirby revealed that 49 of the largest 50 firms have started testing on the NSCC side, representing 98% of volume. On the DTC side regarding the pure settlement layer, 100% of the top 30 firms have participated in testing, representing over 80% of the volume.
The DTCC is now scripting certain scenarios that could potentially disrupt T+1, and is encouraging organisations to do the same. “Whether that be holiday support, OCC corporate actions testing – that’s all part of the playbook and the test plan itself. We do support ad hoc testing during every cycle – so if there is a scenario that firms want to test, then they are certainly free to do that.”
Plans for the big day
As we draw closer to the T+1 implementation date, plans have started to be drawn up for the day of the switch, with moderator of the panel, AGC’s Debbie Mercer Miller, asking panellists for their high-level plans for Friday 24 May.
“I’m going on vacation – that would be my high-level plan,” joked Kirby, before stating: “From our perspective, we’ll have watch parties, monitoring system performance and availability. We feel very comfortable about our preparations and we will have the right level of monitoring in place from a core settlement perspective.”