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DTCC to time travel beyond T+2

First Published 23rd January 2018

DTCC to modernise US equity market structure with new shortened settlement processing options for pre-and post-trade

Following the transition from trade date-plus-three days (T+3) to trade date-plus-two days (T+2) settlement last year, one of the last remaining exposures in the settlement system is time according to The Depository Trust & Clearing Corporation (DTCC). Time increases the risk of an unpredictable event that could affect the transfer of cash or ownership of securities from the point of execution through settlement.

The DTCC proposes to mitigate this time risk with accelerated time to settlement and settlement optimization. This could enable clients to improve and speed workflows, optimize capital and lower risk, reducing settlement processing inefficiencies through automation.

Decreasing the time between trade and settlement has traditionally been achieved by reducing the number of full calendar days required while leveraging existing processes.

To address process opportunities, DTCC proposes moving settlement of eligible equity trades at its subsidiary, National Securities Clearing Corporation (NSCC), from the afternoon of settlement date to the morning before market open. This is intended to remove an entire market day of settlement exposure without eliminating a calendar day.