August 2023

Video: Practical steps to prepare for T+1

Video transcript

Well, I think the first one really should be some sort of front to back assessment around their current processing infrastructure: the systems, the processes, the data hand offs and the gaps.

And actually that process discovery is a useful exercise, certainly, for bringing the whole organisation along.

If we think about settlement as a process, it’s linked to trading, it’s linked to middle office, and it’s linked to back office.

So T+1 isn’t a process that’s owned by a single function within any institution.

It’s actually the output of various systems and processes hanging together, so the first point really should be able to map and understand that front to back flow.

Whilst an obvious statement, that level of clarity around process and process ownership is not always clear to every institution.

The second point is really to start modelling through that process some of the obvious friction points or causes for exceptions.

And actually thinking around in a world where a system may well run a batch overnight, deliver me data that I then go and run a set of processes on to make sure I’m ready for settlement on a T+2 basis, I no longer have that window of time.

So what does that mean for me as an organisation in terms of being able to future-proof that process? Some of that could be full automation, there may well be smart ways to do things.

Some of that could be through system change to make systems less reliant on batch driven processes and maybe more kind of exception management and intraday driven.

That’s quite hard, actually, for a lot of the infrastructure that persists within the capital markets space.

But certainly being able to then start to take a look at that journey that a trade will take for your infrastructure is very much a kind of a secondary point and doing some assessment around that.

And then the third point is starting to think around maybe a bit more holistically around the causes of exceptions in the first place.

You know, what are some of the things that you’re fixing on a T+1 basis in that traditional exception management model that you could perhaps fix pre-trade, as an example?

Or you could be fixing intraday as that trade starts its journey through your internal infrastructure and then goes externally.

And certainly my view on this is when we look really at what causes exceptions, it’s predominantly data within the process.

Data is missing from a transaction; data needs to be enriched somewhere, and that process fails and creates an exception; or that data isn’t available quickly enough so it has to be enriched and added into the transaction itself, perhaps on a T+1 basis, or the day after the trade is booked.

And for me it’s all of those missing data points and data gaps, which is where organisations should be putting their focus.

Because by being able to be transparent around some of those challenges and being proactive around trying to fix a lot of those data challenges at source, organisations will naturally find that this kind of processing cycle time or that journey of a trade through their infrastructure will naturally happen a lot quicker.