T+1 Settlement Cycle: Accelerating Towards Compliance with Loffa’s Technology

The financial landscape is undergoing a significant transformation with the U.S. Securities and Exchange Commission (SEC) mandating a shift to a one-day settlement cycle (T+1) for U.S. cash equities, corporate debt, and unit investment trusts by May 28, 2024. This evolution from the traditional three-day (T+3) to a two-day (T+2) and now to a T+1 settlement cycle marks a pivotal change aimed at enhancing market efficiency and reducing associated risks.

This shift is a direct response to the market volatility experienced in March 2020 due to the Covid-19 pandemic, further emphasized by the disruptions seen during the meme stock phenomenon in early 2021. The SEC’s goal with T+1 is to mitigate credit, market, and liquidity risks, thereby safeguarding investors and streamlining the securities transaction process.

SEC Chair Gary Gensler highlighted the benefits of this move, stating it would “reduce latency, lower risk, and promote efficiency as well as greater liquidity in the markets,” ultimately fostering a more resilient and efficient market infrastructure.

The Challenges and Opportunities of T+1

Transitioning to T+1 by the May 2024 deadline poses significant operational and technical challenges for many firms. This compressed settlement cycle necessitates enhancements in transaction processing, straight-through processing (STP) capabilities, and system upgrades to accommodate the faster pace.

Loffa recognizes the urgency and complexity of this transition for financial institutions. Our mission is to facilitate this shift through our cutting-edge, automated workflow solutions designed to streamline operations and ensure compliance with the new regulatory landscape.

How Loffa Elevates Your Firm’s Readiness for T+1

Our approach focuses on empowering firms to overcome the hurdles of the T+1 transition seamlessly:

• Automated Solutions for Enhanced Efficiency: Loffa’s suite of web applications automates critical aspects of the trade lifecycle, reducing manual intervention and the potential for errors.
• Compliance and Record-Keeping: With the SEC’s emphasis on improved record-keeping and the need for straight-through processing, Loffa ensures your operations align with these requirements, facilitating compliance and operational excellence.
• Operational Resilience: Our solutions are designed to enhance the resilience of your operations, ensuring you can navigate the complexities of the T+1 settlement cycle with confidence.

Embrace the Future with Loffa

As the deadline approaches, the necessity for firms to adapt becomes increasingly apparent. Loffa stands ready to assist your transition into the digital age, ensuring your processes are not only compliant but also optimized for efficiency, security, and risk management.

Let Loffa guide your firm through this transformative period, ensuring you’re not just prepared for the T+1 compliance deadline but are also positioned to thrive in the evolving financial marketplace. Together, we can embrace the future of financial transactions, leveraging technology to foster growth, stability, and resilience.