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T + 1 War Rooms – Europe :
Picking a definitive go-live date for T + 1 settlement and sticking with it was key for the US , now Europe needs to do the same , said industry experts during the final week of the T + 1 War Rooms initiative .
Discussions turned to the necessity of establishing a clear deadline for transitioning to T + 1 across the continent – and aligning , if possible , with the UK . This mirrors the approach that successfully mobilised the US to meet the 28 May 2024 settlement deadline . One expert emphasised the importance of setting a specific date : “ Picking a day – it ’ s huge . I ’ ve really only heard that this week and it makes perfect sense and that did make things very clear , there was no movement on that at all . Having a day everyone can work towards an achievable day as well .”
They added : “ Nothing too aggressive or too far away , an achievable date and stick with it – I think that ’ s vital .” This shared sentiment across the roundtable underscores how a well-defined timeline can unify industry efforts and concentrate resources . This echoed words from our final North American War Room – where it was noted “ the more time you give people to admire the problem , they ’ ll do it and take advantage of it .”
All experts agreed that a fixed deadline will provide regulatory certainty , ensuring that all market participants are aware of the timeline and can plan accordingly . This prevents ambiguity and promotes coordinated efforts across the industry . One post-trade expert echoed this sentiment , noting : “ A date needs to be set , but not too soon because we can end up shooting ourselves in the foot and trying to race to a deadline which we haven ’ t even figured out .”
They continued : “ We had that problem in the UK , with what the Geffen report says in terms of what day the UK should aim for … when we haven ’ t completed our technical assessment yet . We ’ re still in that one-to-two-year phase of trying to complete that technical assessment before we can decide how much work is needed before we can commit the UK to move to T + 1 , but I agree , once we understand what ’ s ahead of us , then a day is required .”
The industry is crying out for clarity on an implementation date
The consensus among industry experts in Europe was unanimous : a clearly defined deadline — neither overly ambitious nor excessively distant — will offer regulatory certainty , ensuring that all market participants understand the timeline and can prepare accordingly .
Additionally , knowing the exact date allows firms to allocate resources efficiently , prioritising the necessary technological upgrades and process adjustments .
As Gemma Watts , director , middle-office product manager , Citi securities services , explained : “ We spent a lot of time with our clients first and foremost getting them to understand the affirmation process in the US market , and then in preparation , setting up segregated Trade Suite ID ’ s , making sure SSIs were updated in Alert , and configuring match to instruct , which meant that by May , our affirmation rates were above the industry average .
“ We actively worked with clients , including their brokers , to make sure that the affirmation rates were as high as possible . I think all that preparation was key when it came down to the actual affirmation rates being higher than expected .”
LESSONS FOR EUROPE Comprehensive technical assessment is a crucial first step , agreed many of the experts , with one stressing the importance of preparation : “ It shows the criticalness of the collaboration between different stakeholders within the industry … it took around three years in the US for the industry to be working together .”
Involving all stakeholders in the decision-making process is also vital , which was agreed by all at the roundtable . Regulators , financial institutions , technology providers , and market participants need to collaborate to align their efforts and address any potential challenges . Another Germany-based expert mentioned the complexity of the European market , saying : “ There are some stakeholders which seem to enjoy the T + 2 environment and would not be unhappy if the T + 2 environment remains in place a little longer . There are a lot of different parties and stakeholders which have to be brought together here .”
A progressive timeline , similar to the US approach , can help manage the transition smoothly . The consensus amongst the roundtable is that setting interim milestones and ensuring continuous monitoring and support throughout the process can help to facilitate this .
16 Global Custodian Week 4