News on Securities Finance Regulations | CASLA: T+1 achieves smooth landing after deployment

T+1 has proven to be a smooth transition for the US and Canada, and participants have now advised the UK not to be afraid to “have those difficult conversations” as the country works to implement a shorter billing cycle.

Market participants gathered to attend the 14th annual Canadian Securities Lending Association (CASLA) conference in Toronto. The panel, titled “T+1 in Hindsight,” discussed the transition to a shorter billing cycle for the U.S. and Canada, more than a week after its official introduction.

The panelists, moderated by Phil Zywot, head of US equities and US companies at BNY, were asked about unexpected surprises around the transition, product recalls, automation and how the UK should deal with its own transition to T+1.

“It seemed like the ‘unexpected surprise’ after the launch of T+1 was the lack of surprises,” said Ahmed Shadmann, head of Agency Trading Canada and non-U.S. equities at State Street. He added: “I was preparing for a doomsday scenario, but it went quite smoothly. The preparations paid off.”

According to one panelist, there were “a few hiccups” during the transition, but market participants were prepared and continued to monitor the move.

Industry concerns about a potential increase in failures on May 27-28 “have not materialized,” confirmed Mathilda Yared, managing director of global securities financing at National Bank Financial.

The panel agreed that the move to T+1 had brought the industry closer as companies participated in “tremendous collaboration and discussions”. However, one panelist in particular stated that T+1 may be a long way off, but there is a long way to go. He advised companies to remain vigilant and not become complacent.

In April, the UK government agreed to move the country to the T+1 billing cycle. This work will be led by the Accelerated Settlement Task Force (AST) with the assistance of its Technology Group, which aims to implement T+1 no later than the end of 2027.

Offering advice on implementing T+1 in the UK, the panel noted that companies should not be afraid to have “those difficult conversations”. Companies should work with all reputable companies, leverage their suppliers and listen to available solutions.

Alexa Lemstra, director of customer relationship management at EquiLend, encouraged the UK to “get ahead” as the deadlines are “coming up fast”.

She continued: “Use the budget and deadline to look at the entire lifecycle and understand where greater efficiencies can be found. Participants will be moving into a real-time environment and will need a risk-mitigating view, transparency and visibility across the back office, in the middle and in the office. Everyone must act quickly to deal with exceptions as they arise.”

In conclusion, Yared said: “Partnerships between borrowers and lenders are extremely important. The UK must establish this line of communication, even if it is difficult.

“Look at the market infrastructure available. Maybe what you want to achieve as an industry isn’t possible with the infrastructure we currently have, but there’s no reason why companies can’t come together and implement something that will help achieve the end result needed, just like we did in Canada. ”