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The calm after the storm
As a follow-up to our T + 1 Industry Issues Forums where the worries were plentiful , we established the War Rooms initiative to address the seemingly inevitable difficulties participants would have post-implementation . What actually occurred was something few were expecting .
You could say we were storm chasers . Much like the legendary duo in the 1996 film Twister , we drove right at the centre of the incoming tornado wanting to understand more about it and how we could help those who lay in its destructive path . Global Custodian and our partners for this project The ValueExchange had been charting this tempest – known as T + 1 – for almost a year , hosting monthly webinars which tackled the questions we received from our audience , of which there were many . Right up until the deadline we were still receiving questions asking what an affirmation is . All signs pointed towards issues across different time zones , for those executing FX , securities lending transactions , ETFs and stretching as far as corporate actions . So we established the T + 1 War Rooms , an initiative to bring together participants from across the industry from the world ’ s asset managers to their equally sized global custodians , along with market infrastructures , brokers and a range of other notable settlement experts to navigate this unavoidable hurricane of challenges . We hosted three weekly sessions over a four-week period – one for each of Asia Pacific , Europe and North America – in collaboration with our partners on the project Citi , Delta Capita , Xceptor and FIS . But unlike Helen Hunt and Bill Paxton , what we found at the eye of the storm was not the chaos and flying cows we expected ( if you haven ’ t seen the film , the bovine reference here will seem really strange – Google it !) but instead we found calm . Here ’ s where the difference between what occurred with T + 1 and nature ’ s fury differ though – the calmness we found was no mystery , it was simply a result of human effort . Perhaps nobody wanted to tempt fate in the build-up to the transition to T + 1 , but I heard very few people predict such a smooth transition to a shortened settlement cycle . The doomsday predictions had not been unfounded – levels of preparedness which could be quantified were alarmingly low in the run-up to 28 May . But what prevailed were the countless hours the industry put into the preparation for this monumental shift , an overpreparation if you will . The Command Centres and individual War Rooms established to support clients were essential . Over the four weeks of this initiative , we delved into why this was such a success , moving – unexpectedly – onto how the move could become a blueprint for other markets in the future and just what steps went into making this such a positive outcome . We kept anticipating tests from index rebalancing , public holidays and the move away from a hypercare focus , but alas , the industry passed each of them with flying colours . This digital issue represents a story of what happened over the first month – the warranted back-patting , the small issues which arose , trends around affirmation and fail rates , and how custodians continued to support their clients over the fourweek period . You ’ ll notice in the fourth week of our discussions , attention turned to the industry ’ s own Twister sequel as European and Asian markets also look to move to T + 1 – where the forecast also suggests a turbulent time – but perhaps the lessons learnt from the US move can help calm the storm – the experts from our panels certainly seem to think so .
Jonathan Watkins Managing Editor Global Custodian
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