T+1 Paperwork: SIA-150, F1SA, and Letters of Free Funds

Updated October 2026, after T+1 took effect. First published February 2024.

Under T+1, the documents that decide how a trade settles have to be on file before the trade happens. A prime brokerage trade and a DVP trade can look identical on the blotter. Whether the executing broker settles with a prime broker or treats the account as its own customer's cash account depends on paperwork, and under T+1 there's no spare day to find out the paperwork is missing.

This post covers what has to be in place before trade date for both kinds of trade. The timing of the Letter of Free Funds itself is covered in T+1 Broke Your Cash Verification, so it isn't repeated here.

Prime Brokerage: The Affirmation Is Fast, the Paperwork Isn't

Prime brokers handled the move to same-day affirmation better than anyone. DTCC's T+1 After Action Report put the prime broker affirmation rate at 98% by the 9:00 p.m. ET cutoff on July 31, 2024, up from 81% in January. The trade flow works. What breaks a prime brokerage trade now is usually a document.

Two industry forms carry the arrangement. The SIA-150 is the agreement between the prime broker and the executing broker. The Form 1 Schedule A (F1SA) ties specific customer accounts to that agreement. With both on file, the executing broker settles the trade with the prime broker. Without a current F1SA for the account, the executing broker has nothing that shows the trade belongs to a prime brokerage arrangement, and the account falls back to being a customer cash account on its books.

Under T+2, a firm that found a missing F1SA the day after the trade still had a day before settlement. Under T+1, the prime broker affirms or questions the trade on the evening of trade date, and settlement is the next day. A missing form found at 8:00 p.m. leaves a few hours, and the fallback is the cash-account treatment below. What a missing F1SA costs the executing broker walks through that fallback in detail, including one relationship that was on track for about 2,500 letters a month.

DVP Trades: The Letter of Free Funds

For a customer cash account, Regulation T 220.8(c)(1) withdraws the customer's right to delay payment for 90 days if a nonexempted security "is sold or delivered to another broker or dealer without having been previously paid for in full by the customer" (12 CFR 220.8). The exception in 220.8(c)(2)(ii) covers a security delivered to another broker or dealer for deposit in a cash account that holds enough funds to pay for it. The executing broker may rely on that other firm's written statement, accepted in good faith. That statement is the Letter of Free Funds (LOFF).

Three facts about the account decide whether a trade needs one, and all three should be known before trade date:

Whether the custodian on the settlement instructions is a broker-dealer or a bank. The freeze applies to deliveries to another broker or dealer.
Whether the security is exempted. Government securities are exempted securities, so they don't trigger it.
Whether the account is documented prime brokerage, which takes it out of the cash-account treatment.

T+1 also shortened the payment period. Regulation T defines it as the standard settlement cycle plus two business days (12 CFR 220.2), so it now ends on T+3.

Who Affirms, Written Down

Rule 15c6-2 adds a third piece of paper, or at least a written procedure. A broker-dealer that takes part in allocation, confirmation, or affirmation needs written agreements or written policies and procedures to finish them by the end of trade date. The SEC's adopting release uses this exact split as an example: a broker-dealer may need one arrangement for "a customer whose securities are held by a prime broker" and another for a customer whose securities are held by a bank custodian. It also says broker-dealers generally should seek written assurances from advisers or custodians that they understand their role.

Before the First Trade in a New Account

For prime brokerage, confirm there's a current SIA-150 with the prime broker and an F1SA for this specific account. An F1SA for a sister fund doesn't cover it.
For DVP, record who the custodian is from the settlement instructions, and whether it's a broker-dealer or a bank. A bank's broker-dealer affiliate is a broker-dealer.
If the account will need LOFFs, find out where and how that custodian wants to receive them before the first trade file goes out.
Record who affirms for the account (the prime broker, the custodian, or the adviser) and the target time your procedures set for that path.
Check that the standing settlement instructions on file match the custodian account named in the paperwork.

Start with the prime brokerage documents, because they decide which of the other steps apply.

Prime Broker Integrated Network (PBIN) keeps the SIA-150 and F1SAs for each relationship in one place. When the prime broker is on PBIN too, both firms work from the same record and see its status. Customer SIA-151s stay with the clearing firm on the executing side. Freefunds Verified Direct (FVD) sends and tracks Letters of Free Funds for the DVP trades that need them.

This post is for informational purposes only and does not constitute legal advice. For guidance on specific regulatory obligations, consult your counsel or compliance advisor.