T+1 road to 2024
Canada, Mexico and the US decided to shorten their securities settlement cycles to T+1. This decision has impacted asset managers and asset owners across the world, for their US, Canadian and Mexican securities trades. Those new rules entered into force in May 2024.
The move to T+1 has had a significant impact on asset managers’ and asset owners’ operations, including their front to back-office, and interactions with their brokers, counterparties and custodians.
While T+1 should bring benefits to asset managers and asset owners (reduced liquidity counterparty and operational risk, reduced capital charges and improved process automation), T+1 has also led to additional costs and the need to change operational set-ups.
How can Securities Services help manage T+1 changes?
With access to Canadian, Mexican and US markets, we are best positioned to understand T+1 impacts on our clients’ operations and to help them settle their Canadian, Mexican and US securities on T+1.
As a global custodian and asset servicing provider with an extensive range of fund and liquidity services, we have continuously worked on integrating our services for enhanced automation and risk mitigation, which is key for efficient T+1 processes.
Our local presence and expertise in key jurisdictions and our follow-the-sun model with pass-the-book capabilities make us your ideal partner to support your operations in a T+1 environment.
T+1 impacts for asset managers and asset owners
Our front to
back solutions
FRONT AND MIDDLE OFFICE
- Asset managers should review their operating models, in particular their trade processing in order to efficiently manage the reduced trade lifecycle and new data requirements for companies classified as registered investment advisors.
- We support your trade activity with a suite of services from trade capture and matching to settlement instructions, across all asset classes.
- We leverage a true global operating model with teams based in APAC, EMEA and US. We operate a single-instance trade platform and extensive connectivity with execution counterparties, custodians or fund accountants.
- You have the possibility to outsource your trading desk (or a part of it) to our Dealing Services team.
TREASURY MANAGEMENT AND FUNDING
- Asset managers potentially face a liquidity gap between the trade date and the cash payment date.
- T+1 should lead asset managers to actively monitor their cash balances and securities positions.
- In addition to the adaptation of the settlement cycle of your fund, our product ‘MyTreasury Forecast’ provides you with real-time full monitoring and control on your cash balances.
- Our AutoFX solutions are designed to support you in your cash and FX needs. Our smart automated offers reduce operational risks and guarantee fund settlement whether your assets are in custody with us or not.
- If needed, our committed overdraft solution may help to answer same day liquidity needs linked to any settlement cycle differences.
CUSTODY
- T+1 requires asset managers and asset owners to adopt automated communication channels to connect with their broker-dealers and custodians in a shortened time window.
- Under T+1, institutional investors have much less time to repair trade breaks and exceptions.
- Our global presence allows us to support clients to manage T+1 challenges.
FUND LIFECYCLE (Fund Administration, Transfer Agent)
- Funds which are exclusively or mainly invested into Canadian, Mexican and US assets may challenge their current T+2/T+3 primary market settlement cycle, as the cycle of the funds is different from those of the underlying managed assets.
- In such case, your clients and distribution platforms would have to be in a position to pay their subscriptions on the intended value date.
- Our fund administration and transfer agent teams support you, whatever the settlement cycle of your funds.
- Based on your impact assessment and fund distribution strategy, we are ready to assess your current operational set-up in order to potentially adapt the settlement cycle of your funds, with earlier Net Asset Value (NAV) and contract note publication.
US T+1: get the full picture
T+1 impact on custody operations
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