As firms prepare for the US move to T+1 trade settlement on May 28 2024, some 350 investment managers are now using the automated trade affirmation capabilities of the Depository Trust & Clearing Corporation’s (DTCC) Central Trade Matching (CTM) platform to accelerate the post-trade lifecycle.
The number of buyside firms leveraging CTM’s Match to Instruct (M2i) workflow with a broker/dealer counterpart has increased by 91% since the start of 2023, with such clients achieving a near 100% same-day affirmation (SDA) rate by 9pm on trade date, DTCC says.
CTM is DTCC’s central matching service for cross-border and domestic transactions across multiple asset classes. It is offered as part of the firm’s institutional trade processing (ITP) suite of services.
The use of M2i is optimal in achieving SDA, which is critical to meeting the US T+1 settlement timelines. 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 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,” says Val Wotton, managing director and general manager of DTCC institutional trade processing.
“Clients utilizing 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 realization of its benefits to market participants."
DTCC has also released a new T+1 scorecard, available through its ITP Data Analytics service at no additional cost to its CTM community. The scorecard allows CTM clients to view the timeliness and efficiency of their operational processes through the lens of T+1, compiling underlying trade data and providing a dynamic 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.
In early 2024, DTCC will expand its trade archival service ahead of the T+1 implementation for subscribing CTM clients to meet their record-keeping obligations as a registered investment adviser (RIA) as 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.