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“Everyone has been impacted by T+1 in some form or another,” said Vinod Jain, strategic advisor, Datos Insights, at the Securities Finance Symposium in Boston.
The panel centred around the impending transition in the US to a shorter settlement cycle, and the extensive work done by the industry in the lead up.
One panellist described how many of the large firms had begun preparations early. She described how her company had shifted its focus since the beginning of the year to metrics, and building additional messaging capabilities.
Mike Norwood, head of trading solutions at EquiLend, also touched on the “long runway” the industry has had for T+1, suggesting it was the natural next step within the market. “Everything has moved towards accelerated processing and increased efficiency, whether it’s reporting or settlement,” he commented.
The discussion also touched on the ways in which market participants needed to work together to make the transition as smooth as possible.
For Tom Poppey, head of product strategy for securities lending at Brown Brothers Harriman, a collaborative effort is needed by all players along the lending value chain, arguing “we’re only as strong as our weakest link”.
As a member of the executive council, he pointed to the revised best practice of the Risk Management Association (RMA), as a proposed series of actions agent lenders can take to prepare for T+1.
While the panellists were positive about the implementation of T+1, they agreed that there would be inevitable challenges as the market adapted.
“There’s going to be stumbles by market participants that may not have adequately prepared. It might take a while, but the market is going to be better, ultimately stronger, and more resilient as a result,” argued Poppey.
“There’s going to be speed bumps,” concurred Thomas Veneziano, product director, head of NAM Product at Pirum Systems. “We need to note the pain points and learn from them, so that the next transition will be even smoother.”
Nevertheless, panellists remained optimistic. As Veneziano concluded: “This industry has a way of working itself out.” Norwood was even more optimistic — “T+1 is going to be smoother than we all give it credit for”.
