With T+1 in the US only four months away now, the Depository Trust and Clearing Corporation (DTCC) recently released a new affirmation progress report presenting post-trade best practices for achieving a shorter settlement cycle. Market participants should endeavour to affirm at least 90 percent of their transactions by 9pm Eastern Time (ET), the organisation recommends, and the key could lie in TradeSuite ID numbers.
Having at least 90 percent of all trades affirmed by 9pm ET on trade date would be necessary if the industry wants to maintain current levels of settlement efficiency even on a shorter settlement cycle, wrote the DTCC in a statement. Based on numbers from December 2023, however, only 69 percent of all trades managed to meet the 9pm deadline.
Take a number
In institutional trading in the US, trades are confirmed with the TradeSuite ID, which automates trade detail distribution between counterparties. Most investment managers located outside of the US, however, do not have their own TradeSuite ID number. Instead, they usually work with custodians with omnibus accounts, and use their custodian’s TradeSuite ID number.
The report pointed out a flaw in this practice – “when numerous market participants use a single TradeSuite ID number, it does not allow clear visibility into which investment managers have affirmed trades on time and which have not. It’s perhaps not surprising, therefore, that trades using omnibus TradeSuite ID numbers have only a 43 percent affirmation rate by 9PM ET on T”.
DTCC therefore urged investment managers to obtain their own TradeSuite ID numbers, which can be done at no cost and without subscribing to the TradeSuite ID service. “If investment managers choose not to obtain their own TradeSuite ID number and continue using their custodians’ omnibus account, they must work with the custodian to define a service model which ensures the trade will be affirmed by 9PM on T.”