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White Paper

Shortening Securities and Cash Settlement Cycle from T+3 to T+2

 

The European Commission (EC) has mandated reducing the settlement cycle for securities to not later than T+2, to be implemented by 2015. This will help drive market efficiency through process optimization and decrease the trade lifecycle risks.

Reducing the settlement cycle from T+3 to T+1 poses high risks and challenges to market participants due to the lack of key enablers, technology limitations and increased investments required for implementation.

On the other hand, transitioning to T+2 requires lesser investments with fewer changes to the business processes by each participant. The most important change required for transition is to mandate market participants to affirm trades on the day the trade is executed, enabling a timely and accurate settlement.

In this white paper, we discuss why firms must look beyond short-term goals and evaluate options to re-engineer their business processes and enhance the IT infrastructures of the affected business areas before transitioning to a reduced settlement cycle. They must view this as an opportunity to invest in their technology infrastructure, to achieve the end objective of decreasing risk while enhancing business efficiency.