[ W E E K 1 ]
T + 1 War Rooms – Europe :
Preparation and execution prevail ; but what happens when the hyper focus ends and market stress occurs ?
Participants in Europe are so satisfied with the transition of T + 1 that the only issues are hypothetical ones possibly occuring at the end of this period of heightened focus , command centres and 24 / 7 support from their custodians .
Market participants in Europe are drawing comparisons between the move to T + 1 and the Y2K scare in 1999 , after the transition to a shortened settlement cycle occurred without any drama or incident , for the most part .
Despite worries ranging from spiking fail rates and low affirmation percentages to funding gaps and system glitches on day one , European participants agree that the over-preparation , hyper focus and sheer effort from the industry through education and support led to a historic transition .
“ It was very smooth and someone in our office likened it to Y2K , which I took umbrage with because I think the reason it was smooth was because the industry got its act together and made sure that everybody knew what they had to do and when they had to do it . And I think that really folded into a very smooth transition ,” said one operations executive from an asset manager , speaking on the T + 1 War Rooms initiative launched by Global Custodian and The ValueExchange , in partnership with Citi .
“ We don ’ t often get the chance to pat ourselves on the back , so you might as well take this opportunity .”
Following on , another buy-side voice added : “ I think as much as we can make a joke that it was kind of a non-event , that shouldn ’ t away from the planning , preparation , full scale project teams that went on for a year or so beforehand .
“ Our approach was very data driven in the lead up , identifying those kind of broker confirmations that may have been of concern . To work with those brokers to make sure they were coming in on time , we saw very similar to others in terms of actually improving settlement rates .”
The positivity reflected the sentiment of the industry across the world following the switch to T + 1 , and almost as if it were too good to be true , the group of speakers on the roundtable were almost searching for some minor issues to report .
Participants referenced the overnight issue at DTCC as a minor hiccup , however no transactions appeared to be impacted , while there were some grumbles about brokers who hadn ’ t got their house in order .
“ We did see a number of brokers that had incorrectly formatted confirms ,” said one speaker , while another noted : “ There was only one errant broker who was consistently not affirming their trades . Right up until Friday that was the case . But on Monday they came through . But I do think it was largely to do with the fact we threatened to stop trading with them if they didn ’ t comply , which they promptly did .”
Those issues seem confined to smaller brokers , with one large participant from that community noting : “ We seem in good health . Look , there ’ s a couple of counterparties that aren ’ t on CTM that aren ’ t building or billing the confirmations in time for affirmation . So that ’ s been a case of targeting those smaller counterparties to say ‘ look , when are you going to be ready ?’”
CALM BEFORE THE STORM ? With so much praise for the focus and preparation of the industry , attention will now turn to the future where a combination of public holidays , volumes and volatility spikes and the foot coming somewhat of the pedal in terms of sheer focus on the new operational changes .
“ The hyper-care focus helped in those initial days , because we wanted to monitor changes related to volumes received at different times ,” said Michele Pitts , global head of custody data , securities services , Citi . “ With the return to our new BAU processing , even without the hyper-care focus , we will not see a fall off of coverage and support as we now understand that the systems can accommodate and function through
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