Barely two years after the move to a T+1 settlement cycle, post-trade reform is back on the agenda in the US.
The Depository Trust & Clearing Corporation (DTCC) is pushing ahead with its multi-year, multi-pronged Transformation Initiative, focusing on operational resilience, client connectivity and equity clearing as well as settlement enhancements. Custodians, such as BNP Paribas’ Securities Services business, are helping their clients with the transition.
Key takeways:
- DTCC is transforming its most critical and foundational applications into a flexible, more advanced and modular platform. Their modernized applications will leverage industry standards and enable quicker time-to-market to meet industry needs, eventually paving the way for interoperability between traditional and digital assets.
- Equities Clearing and Settlement enhancements, with an ambition to improve and strengthen DTCC members’ connectivity and operational resilience, are some of the modernization initiative’s strategic priorities.
- The DTCC Transformation initiative will be incrementally phased in between now through 2028 and it will require custodians to prepare and test their systems ahead of each rollout.
- BNP Paribas’ Securities Services business is proactively making changes to ensure that clients benefit from the efficiencies DTCC Transformation is expected to bring.
DTCC’s Transformation initiative: what is changing? Expanded Operational resilience, client connectivity, Equities Clearing and Settlement enhancements
The transition to a T+1 settlement cycle in the US may have gone by relatively smoothly, but the core processes underpinning the industry’s equity clearing and settlement, client connectivity and operational resilience still run primarily on a mainframe and are being updated.
These reforms will help the industry adapt to evolving client expectations and market developments, including the rise of digital assets, by improving risk management and ensuring future readiness.
DTCC’s move to a more modular, API‑enabled platform aims to enhance agility, efficiency, simplicity, operational resilience and innovation, according to Val Wotton, Head of Equity Solutions at DTCC.
The DTCC Transformation initiative, which is being rolled out in stages, will introduce the following:
- A more rigorous operational resilience framework, a move that will provide stability and security to clients.
- As leading US stock exchanges prepare to offer 24×5 trading capabilities, National Securities Clearing Corporation (NSCC) transformed itself into a 24×5 CCP in June 2026 so that it can support extended trading hours for clients.
- NSCC is partnering with the Options Clearing Corporation (OCC) to allow for Exchange Traded Funds with option components to be centrally cleared and settled, further reducing friction in the clearing process for clients.
To better align with other global standards for trade settlements, DTCC will adopt auto-partial settlements. The move will help reduce the number of trade fails, late settlements and cancellations, leading to risk reduction and liquidity optimization. Partial settlement and hold and release are functionalities which US investors and financial intermediaries are looking for
Enhancing participants connectivity is another goal of DTCC’s modernization initiative. It will do this by rolling out standardized interfaces and by making the ISO 20022 format mandatory for Settlement. Not only will this augment participant experience, but it will allow for services and data to be delivered to them more seamlessly.
BNP Paribas’ Securities Services business ramps up its preparations as DTCC Transformation initiative progresses
Now is the time for clients to check that their custodians are preparing for the changes.
DTCC’s multi-year modernization initiative represents a foundational evolution of the US post-trade ecosystem. At BNP Paribas, we have mobilized early to align our technology, operations, and governance so our clients can transition in good time with confidence and continuity
He added:
Our focus is not only on readiness, but on delivery, namely translating DTCC’s new capabilities into practical, client-centric solutions that enhance automation, transparency, and operational efficiency across the custody and settlement lifecycle.
BNP Paribas’ Securities Services business is working closely with DTCC.
We are partnering with DTCC throughout the Transformation program to ensure our custody and settlement services adapt accordingly and support clients throughout the entire process
DTCC had created testing environments so that members can familiarize themselves with the new processes before they go live. Elsewhere, not only is DTCC hosting regular virtual events and sharing educational resources on its Transformation site, but it is also running virtual working groups where members (including BNP Paribas) can engage with each other and share best practices.
We are providing members with dedicated integration leads, which will help them with their project planning. It will enable us to build out detailed metrics about the testing at firms by giving us better visibility and real-time information into the level of testing at an individual firm and industry level. This will be invaluable for benchmarking purposes, noted Wotton.
DTCC Transformation is going to impact the industry. But with regular cross-industry engagement and coordination, along with advanced preparation and thorough testing, custodians will be well-positioned to deal with the transformation, as will their clients.
An eye to the future: how the DTCC Transformation initiative is laying the foundations for greater digital asset interoperability
In parallel with its ambitious Transformation initiative, DTCC is creating a framework to support the transition to a digital asset ecosystem.
Just as we are working with DTCC on its modernization initiative, we are also engaging with them on their digital asset developments to ensure we incorporate any changes into our solutions for clients. For our clients, this means choice and optionality and the ability to continue operating within established post-trade frameworks while being structurally ready for tokenization and new settlement paradigms as the market evolves