A new study from Tower Group finds that securities firms are focusing their information technology spending on upgrading to T+1 clearing and settlement.

Firms estimate that they will spend US$2.5 billion on the project over the next three years, but this is expected to rise to nearly US$5 billion as the project advances, says the U.S. Securities Industry Association. TowerGroup and SIA surveyed 47 firms in March and April 2001.

“The survey illustrates the enormous effort that securities firms are undergoing to deliver fast, more dependable service in handling their clients1 transactions,” says Donald Kittell, SIA’s executive vice president. “Our member-firms are beginning the process of setting up T+1 project management offices and determining budgets for this transition. This industry initiative will pick up speed quickly now and account for the lion’s share of Wall Street1s technology investments for the next three to four years.”

The majority of firms rated improving their retail distribution as a “high” priority, followed closely by enhancing their customer relationship management systems.

The highest priority for the firms1 operational budgets was improving retail web services, 17% of firms1 information technology development spending is now on retail web development, compared with 12% in 1998. In addition, firms will invest almost US$1 billion on customer relationship management technologies in 2004, up from US$981 million in 2000.