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With the transition to a shorter securities settlement cycle a little over a year away, a new survey finds that a significant number of firms are not yet prepared for the shift.

According to a survey commissioned by the major U.S. and Canadian clearing agencies — Depository Trust & Clearing Corp. (DTCC) and the Canadian Depository for Securities (CDS) — to examine the industry’s readiness for the move to T+1 (trade date plus one day) from the current T+2 settlement cycle, 41% of respondents (and 61% of buy-side firms) haven’t begun any preparations for the move.

The survey — which canvassed brokers, advisors, institutional investors and custodians — also found that less than half of respondents (46%) said they would be ready to implement T+1 settlement in March 2024.

The survey was completed before the official transition date was set by the U.S. Securities and Exchange Commission (SEC).

Industry trade groups were lobbying for Labour Day weekend 2024 as the implementation date. But last month, the SEC declared the transition will take place around the U.S. Memorial Day weekend (May 28, 2024) — with the Canadian industry adopting T+1 on the same schedule.

Now that the implementation date has been set, “market participants can begin their focused preparation for T+1,” said the DTCC in a paper detailing the results of the survey, which noted that industry firms expect the change to affect all areas of their operations.

“T+1 will impact many segments of the trade lifecycle including middle office, settlement, fails management, securities lending and the corporate actions,” the survey found.

In particular, the survey noted that brokerage firms “see significant challenges and costs in realizing T+1 — having to address internal (legacy) technology and external messaging challenges at once.”

And buy-side firms “are so far not engaged on T+1 and risk over-estimating their reliance on their service providers to be ready.”

The survey also found that two thirds of respondents are “struggling to resource T+1 projects.”