When securities firms open for business the first day after Memorial Day weekend 2024, the settlement period for most securities transactions will be a single day (T+1). Whether or not you’re worried about your firm’s ability to meet this date is likely dependent on your technology foundation. To be fair, it may also depend on how much international trading you do and where your firm sits globally. In the US, we benefit from having settlement activity concentrated via a single entity in the DTCC vs. the European market, for example, which is much more fragmented, with settlement activity spread across 31 such entities.
For US-based firms, it’s really all about your technology foundation. Is yours ready? There has been a lot of noise in the press about all the work to be done for firms to be ready. This article, published shortly after the final rule and implementation date were announced in February 2023, stated that “..research indicates the majority of banks and brokers require significant updates to their systems in order to prepare for the move…” But that’s not true for everyone.
Your firm’s tech stack configuration and complexity will drive the overall amount of work – technology and operationally – necessary to be ready for the May 28, 2024 implementation of T+1. Common across all firms in the wealth and asset management markets is that the portfolio management technology platform you use to trade and rebalance client accounts will be a key determinant in how heavy this lift is going to be over the remaining 12 months.
Key questions to consider:
- Is your portfolio management technology real-time? That’s table stakes here. If your firm is instead working with a batch system, then you may need to believe all the hype and hunker down.
- Can your portfolio management platform already accommodate T+1? If the answer is “yes”, you may be able to plan a trip for Memorial Day Weekend 2024.
- Does your portfolio management technology partner have a plan, and have they communicated this plan to you? If yes again, double down on those long weekend plans.
VestmarkONE® clients can answer “yes” to all three
Our portfolio management and accounting platform – VestmarkONE – is and always has been a real-time system that can accommodate any settlement period – up to and including same-day settlement (T+0). For VestmarkONE, all that’s necessary to change the settlement days for any security (or all securities) is an update to the “settlement days” field in the security master. No development, no engineering work, no re-configuration, no conversions, no heavy lifting will be necessary. Further, our fully automated plan for each client-specific implementation, that requires no action be taken by our clients over that holiday weekend, has already been discussed with each firm individually. All advance inputs needed are being mapped out and collected with our clients now, to ensure that the automated updates for each firm-specific security master will be done 100% in accordance with their instructions.
The devil may be in the details, but the beauty is in the foundation
VestmarkONE is a rules-driven, integrated portfolio accounting (IBOR) and trading system that was built this way from the start. That’s the foundation upon which all of our innovations have been built, and which allows for seamless transition to the shortened T+1 settlement cycle. This foundation has for many years offered other powerful advantages such as same day trading, real-time visibility into account holdings, enabling automated workflows to scale myriad processes from personalizing client portfolios to ensuring compliance with all client and firm-imposed rules and restrictions prior to every single trade, and more.
Call us today to learn more.
By Vestmark Inc., Resources