SHORTENED SETTLEMENT CYCLE: NORTH AMERICA
T+1 settlement cycle is live in the U.S., Canada and Mexico as of May 28, 2024.
Regulators have shortened the securities settlement cycle in the U.S., Canada and Mexico to trade date plus one day (T+1). The change became effective May 28, 2024.
Understanding the goal of T+1
Securities settlement cycles have evolved in the different regions over time. With each change, the goal in moving to a shorter settlement cycle is to reduce risk and increase efficiencies. T+1 is expected to lower credit and counterparty risk, particularly during periods of high volatility, as well as moderate liquidity, margin, and capital requirements.
T+1 will also bring challenges. The reduced timespan means there will be less time for core functions such as securities lending recalls, foreign exchange linked to securities transactions and potentially misaligned settlement cycles (Europe and many other markets will remain on T+2) based on the makeup of an ETF basket, to name a few key areas of focus.
U.S. Bank T+1 affirmation models
Please refer to the following affirmation models that U.S. Bank supports for T+1 settlement. Please ensure you have communicated your affirmation model to your custody administrator or trade services analyst. Also ensure use of your own TradeSuite ID to be listed in the “Inst/Broker” field as part of your settlement instructions.
|
Affirmation Model |
Process Flow |
Client-Generated Trade Instruction Formats |
U.S. Bank Sends Affirmation Message to DTCC |
Clients Who Can Benefit |
|---|---|---|---|---|
|
Auto-Affirmation |
A confirm is generated by the broker, affirmed by the client and sent to U.S. Bank which will auto generate a trade settlement instruction. |
Client is not to send trade instructions. |
No |
Clients submitting single allocation trades who affirm confirms and do not send trade instruction to U.S. Bank. |
|
Client Affirmation |
Confirm is generated by the broker and affirmed by the client. Client sends trade instruction to U.S. Bank.
|
Instruction required. Acceptable formats:
Note: Auto Affirming would eliminate the need to instruct the custodian bank. |
No |
Clients affirming confirms, who submit custodial trade notifications via Automated Trade Transmission channels and may participate in an industry platform (e.g., DTCC M2i, CTM Affirmation workflow). |
|
U.S. Bank Affirmation |
U.S. Bank auto-matches client trade instructions received via FTP files, SWIFT message. Manual trade instructions received in files, PDF, etc., may involve manual matching processes against the broker confirm. U.S. Bank sends affirmation to DTCC. |
Instruction required. Acceptable formats:
|
Yes |
Clients who outsource affirmation services to U.S. Bank. |
Affirmation Model
Auto-Affirmation
Process Flow
A confirm is generated by the broker, affirmed by the client and sent to U.S. Bank which will auto generate a trade settlement instruction.
Client-Generated Trade Instruction Formats
Client is not to send trade instructions.
U.S. Bank Sends Affirmation Message to DTCC
No
Clients Who Can Benefit
Clients submitting single allocation trades who affirm confirms and do not send trade instruction to U.S. Bank.
Affirmation Model
Client Affirmation
Process Flow
Confirm is generated by the broker and affirmed by the client. Client sends trade instruction to U.S. Bank.
U.S. Bank automatically compares the trade instruction to the confirm for trade/confirm pairing and settlement.
Client-Generated Trade Instruction Formats
Instruction required. Acceptable formats:
- SWIFT
- FTP (U.S. Bank Layout)
- Pivot (U.S. Bank Layout)
Note: Auto Affirming would eliminate the need to instruct the custodian bank.
U.S. Bank Sends Affirmation Message to DTCC
No
Clients Who Can Benefit
Clients affirming confirms, who submit custodial trade notifications via Automated Trade Transmission channels and may participate in an industry platform (e.g., DTCC M2i, CTM Affirmation workflow).
Affirmation Model
U.S. Bank Affirmation
Process Flow
U.S. Bank auto-matches client trade instructions received via FTP files, SWIFT message. Manual trade instructions received in files, PDF, etc., may involve manual matching processes against the broker confirm. U.S. Bank sends affirmation to DTCC.
Client-Generated Trade Instruction Formats
Instruction required. Acceptable formats:
- SWIFT
- FTP (U.S. Bank Layout)
- Pivot (U.S. Bank Layout)
- Pivot Trade Affirmation
- Email (least preferred method)
U.S. Bank Sends Affirmation Message to DTCC
Yes
Clients Who Can Benefit
Clients who outsource affirmation services to U.S. Bank.
Custody conversation on T+1 webinar
Watch the replay from our March 28 webinar where Doug McNaughton, Laura Cote and Brian Baker discussed insights from our client outreach campaign. You can also view the webinar presentation slides by clicking the link below.
Your feedback matters
Let us know how we can help you with the T+1 transition.
“T+1 brings another push towards standardization and digital tools to achieve greater levels of straight-through-processing. Market participants need to review internal process flows and client behavioral trends to get ready."
Laura Cote
Senior Product Manager - Custody
Wealth, Corporate, Commercial and Institutional Banking (WCIB)
Access new cash, securities, custody-FX deadlines and Standing Settlement Instructions (SSIs) ahead of T+1.
Log in to U.S. Bank Pivot MarketWatch, a web-based information delivery system that provides market, regulatory and operational information for each market where U.S. Bank provides custody services. In Pivot, navigate to Trade Services to access a PDF with updated deadlines effective May 2024.
MarketWatch delivers real-time, market-specific news bulletins from our Global Network Management team directly to your inbox. If you do not currently have access to Pivot MarketWatch, contact your relationship manager for more information.
Look to your custodian in times of change.
Discover why and how you can rely on your service provider to help you and your teams navigate T+1 and other regulatory changes.
U.S. Bank assembled a cross-functional T+1 project team that spans multiple disciplines internally and has activated governance forums in preparation for T+1. In addition, U.S. Bank product and operations teams conducted a 10-week intensive impact assessment to jumpstart the T+1 program earlier this year. There is ongoing data and business analysis to identify changes to our processes and technology to ensure readiness, with three main objectives:
- Identify opportunities for operational efficiency to reduce the impact of moving to T+1;
- Analyze post-trade performance of U.S. Bank and clients to understand challenges to settling T+1; and
- Client outreach activities to ensure changes required ahead of the T+1 go-live date are communicated.
Yes. U.S. Bank has resources in the U.S. and Europe dedicated to the monitoring and planning for regulatory changes and market developments. As such, we have been anticipating the move to a T+1 settlement cycle and began our discussions relative to the planning and resourcing over a year ago. A core T+1 project team has been put in place as we work to comply with the move to T+1. This team consists of resources across project management, project execution, operations, technology, product, foreign exchange, securities lending, business unit teams, legal, regulatory, risk, compliance, etc. We recently completed an impact assessment of T+1 which further informed our internal and client roadmap.
In addition to the T+1 overall project team, specialists from custody product are the overall leads for this initiative. Doug McNaughton from WCIB’s chief product office is the overall lead for our T+1 readiness program. In addition, Laura Cote, also from the WCIB chief product office, is leading the communications workstream. Both Doug and Laura are based in Boston.
Please coordinate through your relationship manager, custody administrator or trade services analyst. Also, please note that someone from the above team(s) will be reaching out to you proactively if we identify through our data analysis that your activity could be improved ahead of T+1. Examples of potential changes include optimizing the affirmation process or your current model, how you currently instruct U.S. Bank for trade instructions, and the use of industry utilities such as DTCC ALERT® global custodian direct (GCD) for SSI management.
- Affirmed ID Confirm: Upon receipt of a valid affirmed confirm from DTC, the transaction will automatically pend to the underlying custody account.
Note: Clients who have block settlement are not eligible for the Affirmed ID Confirm processing option. - Automated Transmission: U.S. Bank will receive a confirm from DTC and an automated instruction from our client or their advisor. Upon receipt of both instructions, U.S. Bank’s custody system will attempt to match both instructions together as long as both the confirm and automated client instruction are in good order.
- If matching does not occur, the transaction will pend to the underlying account unlinked to the affirmed confirm. We accept automated instructions through several channels (Pivot, SWIFT, sFTP, Trade Hub, Bloomberg and more).
- Manual Client Instruction: U.S. Bank will receive a confirm from DTC and a manual instruction from our client or their advisor. Upon receipt of both instructions, U.S. Bank’s Trade Services team will attempt to manually match the client instruction to a confirm as long as both confirm and automated client instruction are in good order.
- If matching does not occur, the transaction will be manually pended to the underlying account unlinked to the affirmed confirm.
- This is U.S. Bank’s least preferred method and we will be working with our clients to transfer to one of the more automated trade transmission methods noted above.
Yes, U.S. Bank trade instruction deadlines will be changing to support the new DTCC affirmation cutoff time, which is confirmed for 9 p.m. EST on the trade date (T). Please refer to this DTCC document for T+1-eligible financial instruments.
The official, full updated deadlines document that includes trades and FX deadlines will be posted to Pivot MarketWatch ahead of the T+1 effective date.
Note: Canada and Mexico (pending regulatory approval) trade, FX and securities lending deadlines will be established once finalized with our local custodians. In addition, please note that manual trades are our least preferred transmission method and should be automated ahead of the T+1 effective date.
Below is a high-level view of the U.S. deadlines.
Trade deadlines:
On trade date (T):
- Automated trades: 8 p.m. ET (Affirm ID confirm, SFTP, SWIFT, U.S. Bank layout Pivot)
- Manual trades: 5:30 p.m. ET
Securities lending deadlines:
In addition, for accounts participating in the securities lending program, sell instructions must be received by the following times to support the notification to the borrowing party to ensure recalls are returned in time to support settlement.
On trade date (T):
- Automated trades: 1:30 p.m. ET (Affirm ID confirm, SFTP, SWIFT, U.S. Bank layout Pivot)
- Manual trades: 12:30 p.m. ET
U.S. Bank prefers clients or their advisors to be the affirming party on T+1 eligible transactions. Alignment with this model allows for greater automation and increased straight-through-processing (STP) rates. However, U.S. Bank does have the ability to affirm trades on behalf of our clients or their advisors if trade confirmations are correctly billed to a U.S. Bank Institution (Agent) ID and trades are relayed to U.S. Bank in a timely manner.
Please contact your Trade Support Analyst (TSA) for any questions on Standard Settlement Instructions (SSIs) including U.S. Bank Institution (agent) IDs.
Additional FAQs from U.S. Bank
This comprehensive set of 45 questions and answers addresses the move to T+1 in even more depth.
DTCC ALERT® Global Custodian Direct Frequently Asked Questions (FAQ)
ALERT is the leading industry utility for the maintenance and communication of SSI data. ALERT enables efficient communication of SSIs between investment managers, brokers, and custodians, as member firms can maintain SSIs for investment managers that have an existing contract with DTCC.
The GCD workflow connects custodian SSI data to ALERT via dedicated ISO 20022 compliant messages, automating the maintenance and communication process of SSI data housed by custodians.
With ALERT GCD, U.S. Bank custody clients can create fund codes which each represent an individual fund or account. Clients can then request U.S. Bank take control of the settlement instructions for that fund code. From there, U.S. Bank will accept the request to be settlement instruction controller for the fund code and will add the proper SSIs to the fund code. Any changes or amendments to SSIs will be made by U.S. Bank within ALERT going forward. This process eliminates duplication of effort and maintenance of SSIs by multiple parties offline, helping to reduce client inquiries, and more importantly, trade fails and cash penalties in certain markets. Once live, our clients will be able to direct their brokers to ALERT for SSI needs rather than managing the process themselves.
U.S. Bank custody clients will need to sign a contract with DTCC for the ALERT service. Please contact DTCC directly to get started if you are not already a client with an ALERT subscription.
U.S. Bank does not charge a fee for this service.
The institution ID in ALERT should be populated with the Investment Manager’s TradeSuite ID. TradeSuite is a DTCC product offering. Use of TradeSuite is industry best practice and the custodian’s institutional ID should not be listed. A TradeSuite ID can be set up on the MyDTCC portal. More information on TradeSuite can be found via the DTCC website, or by clicking here.
Once your organization signs a contract with DTCC, you will need to create fund codes for each of your accounts with U.S. Bank. The next step is to change the settlement instruction controller for the fund code to the U.S. Bank ALERT acronym: USBKGCD and add the U.S. Bank trust account number as the “A/C# @ Global Custodian”. This sends a request to U.S. Bank, and once accepted, the SSIs will be loaded into ALERT for the fund code.
Please notify U.S. Bank at alertgcd@usbank.com before changing the settlement instruction controller to the U.S. Bank acronym, which is USBKGCD.
U.S. Bank will accept or reject the settlement instruction controller request within 24 hours, during normal business hours (9 a.m. CT to 5 p.m. CT). The SSI data will flow into ALERT within one hour of U.S. Bank accepting the settlement instruction controller request. If no future effective date is selected by the Investment Manager, the SSI will be available for brokers to view as soon as they flow into ALERT. If a future effective date is selected the SSI will still flow into ALERT within 1 hour of U.S. Bank accepting the settlement instruction controller request, but the SSI will not be visible to the brokers until 5pm EST on the day prior to the future effective date that was selected.
U.S. Bank recommends that Investment Managers select a future effective date when assigning U.S. Bank as the settlement instruction controller in ALERT as this allows Investment Managers to review SSIs prior to them becoming visible to brokers. Any existing SSIs in ALERT managed by the Investment Manager will still be visible to brokers until the effective date at which time the SSIs that U.S. Bank has populated will become visible to the brokers.
This service does not allow U.S. Bank to access counterparty/broker SSIs so this information will still need to be provided on trade files.
Please send an email to alertgcd@usbank.com.
Additional Resources
DTCC TradeSuite ID FAQs
DTCC has created these helpful frequently asked questions documents regarding TradeSuite ID, including explanations of TradeSuite ID Numbers and how to obtain one.
Further Questions?
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