Affirmation rate on trade date only improved marginally between January and February, reveals the US’ Depository Trust and Clearing Corporation (DTCC). Its latest affirmation progress statement shows that 74.5 per cent of transactions were affirmed by the Depository Trust Company’s (DTC) cutoff time of 9pm ET in February, a 1.3 per cent improvement on the affirmation rate of 73 per cent in January reported in its last progress statement.
In the breakdown for affirmation rates in various market segments, the prime broker affirmation rate was 83 per cent, up from 81 per cent in January. Custodian or investment manager (self) affirmation rate was 53 per cent, an increase from the 51 per cent in January.
The only segment that saw a decrease was the investment manager auto affirmation (central match) rate. At 89 per cent, it was lower than the 92 per cent seen in January. DTCC puts this decrease down to the 26 new investment managers that joined its central trade matching (CTM) platform during the month. As investment managers onboard, and configure their brokers, the firm expects this affirmation rate to increase and normalise at 92 per cent ahead of T+1.
Automate or pay
With two months to the transition to T+1 in the US, DTCC urges market participant to optimise their settlement workflows and automate their post-trade affirmation process to meet the 9pm ET DTC cutoff time. Those who are unable to do so have the option to settle by night delivery order (NDO) by 11:30pm ET or day delivery order (DDO) on T+1. However, both alternatives are more costly and operationally intensive.