[ W E E K 4 ]
T + 1 War Rooms – North America :
North American securities experts concluded Global Custodian and The ValueExchange ’ s T + 1 War Rooms series with a pair of concluding messages : overpreparation ultimately won the day and now it ’ s time for other markets to make the transition .
On the fourth week of the roundtable sessions , the hunt for any major industrywide issues stemming from the shortening of the settlement cycle was officially declared over and instead the final session marked an opportunity for reflection .
“ We were having some challenging conversations with clients up until a month before ,” said Michele Pitts , global head of custody data , securities services at Citi . “[ Receiving questions like ] ‘ what is affirmation ? And then , you see these same clients at 100 % [ affirmation ].”
“ You go in assuming that there ’ s going to be issues like potential increases in fails or low affirmation rates and you have plans in place to address those , but at least from our perspective I was pleasantly surprised that that was not the case .”
The stage is now set for other markets
‘ Why wait ?’ was the message to other markets from our War Room participants on the final call of our series stating that the work already put in and lessons learnt around are transferable .
REFLECTIONS … Harking back to the Y2K analogy of fearing the worst , the industry – in hindsight – overprepared to the point of seeking perfection and preparing for every eventuality from affirmation rates to issues across FX , securities lending and other adjacent practices . The panel didn ’ t regret any of the time put in however and seemed to agree the paranoia ultimately paid off .
“ Everybody was afraid that everything was going to fall and therefore I think everybody over prepared for the worst ,” said another market participant . “ We really went deep dive into every single process , every single step , ensuring everything was done properly in case something was happening .”
“ Even if we didn ’ t get the traction early on , evidently people were still listening and we then saw that momentum as we were getting close to the deadline and suddenly everybody getting their Tradesuite ID and was starting to have higher affirmation . In the last month we ’ ve seen a growth was quite amazing on our side in terms of the affirmation rate .”
After just over a month of intense focus on the transition and various War Rooms and Command Centres being in place , some experts have even pointed to benefits stemming from the transition – as opposed to just coping .
“ I will say that there ’ s been more efficiency from the dealers , I do feel like trades are getting confirmed even faster and they ’ re getting funded sooner ,” said one expert . “ So , for example , rather than funding CAD dollars at the end of the day , we ’ re funding throughout the day now . So we ’ re definitely seeing some advantages there .”
LOOKING TO OTHER MARKETS Moving forward , the industry will now turn its attention to shortening the settlement cycles in other major markets around the world to avoid fragmentation . The buy-side appear keen for markets such as the UK and Europe to make a coordinated move quickly , and the participants on the final War Rooms session echoed this sentiment , essentially saying ‘ why wait ?’.
“ I think you need to set a date and do it right . When it came to it [ in North America ] everybody said ‘ we have got to figure this out ’. The best way to learn is to be thrown into the fire , which I know no regulator wants to take that approach , but you have to set a date and stick to it and make it happen . We stuck to the date , we didn ’ t push it out .
“ The industry had originally requested Labour Day and we got Memorial Day so it was not what we wanted , but everybody rallied around it and we got it done . You just figure it out .
“ I ’ m thinking about Europe in particular , there ’ s plenty of lead time . They ’ re talking about it now and they ’ re talking about ‘ 26 and ‘ 27 , which feels really far out to me . They should be able to figure this out sooner . I was surprised that it was so late . I would have expected sometime by end of ‘ 25 , because I think once you set a date and stick to it , they ’ re going to make it happen .
8 Global Custodian Week 4