US T+2 gets its own playbook

The T+2 Industry Steering Committee (T+2 ISC) has published an Implementation Playbook. Developed with Deloitte Advisory, the Playbook provides a detailed timeline, milestones and dependencies that market participants should consider in order to migrate to a two-day settlement cycle (T+2) from the current three-day settlement cycle for US equities, corporate and municipal bonds, and unit investment trust (UIT) trades by the end of Q3 2017.

The Playbook provides guidance on issues such as trade processing, asset servicing, documentation, regulatory changes, testing/migration, industry actions and other considerations for achieving a T+2 settlement cycle. It also includes implementation timelines that provide a suggested guideline for regulatory actions, industry actions, market participant implementation, industry testing, and migration milestones and dependencies identified by the industry.

The move to T+2 in the US remains contingent upon obtaining regulators’ support in amending applicable rules in a timely manner, and upon the successful completion of industry-wide testing during Q2 and Q3 of 2017.

Shortening the settlement cycle is widely expected to provide a number of benefits, including reducing operational, systemic and counterparty risk and lowering liquidity needs, while aligning the US with other T+2 settlement markets across the globe. A shorter settlement cycle will enhance US market structure by improving safety and efficiency for investors.