DTCC recently issued a new, comprehensive document to help clients prepare for the transition to an accelerated settlement cycle in 2024. This latest document, T+1 Test Approach: Detailed Testing Framework, provides a deeper level of detail so firms can now prepare for testing T+1 changes with DTCC and other industry infrastructures.
Related: Reviewing the T+1 Playbook
This paper reflects the work done by the T+1 Industry Working Group and incorporates input from various market segments. Firms will be able to work with DTCC’s integration team to coordinate their T +1 testing. The document includes detailed information on:
- The structure of the T+1 industry test, including information on other industry infrastructures participating in the industry test.
- Testing cycles and testing schedules.
- DTCC’s T+1 and T+2 test environments, including information on the role of the different environments.
- How to connect to the different environments and how to get all the required access in both environments to support testing.
- Suggested test scenarios which Members can use to begin preparing their own T+1 test plans.
The final implementation date has not yet been announced by the U.S. Securities and Exchange Commission (SEC); As a result, this document assumes a September 2024 implementation date but recognizes that testing dates may have to change.
“The move to a T+1 settlement cycle has been an ongoing industry effort for well over two years,” said Robert Cavallo, DTCC Director, Clearance and Settlement, Product Management. “We are halfway through a marathon and still have a long way to go, but now that 2024 is in sight – whether that ultimate date is determined to be March or September – we must move from planning and development to testing.”
Although the bulk of this latest paper addresses testing specifically with the DTCC subsidiaries impacted by the move to T+1 (ITP, NSCC and DTC), the industry requested expanding the T+1 test plan to include other infrastructures. As such, the test has been expanded to include exchanges (Nasdaq and Cboe) as well as the Options Clearing Corporation (OCC).
“We’ve said it from the beginning, but one of the most critical steps in the move to T+1 will be industrywide testing, so we can all have confidence in our preparations,” said John Abel, DTCC Executive Director, Clearance and Settlement, Product Management. “The number of changes being made to support the move to T+1 – and the number of firms making changes – means we must coordinate these tests across many touchpoints, to ensure readiness and prepare a successful industry implementation.”
For more information related to accelerating the U.S. securities settlement cycle to T+1 including documentation, FAQs and more, please visit UST1.org.