The Securities Industry Association, trade association of the U.S. investment industry, is planning to review industry’s move to one-day settlement.

“We are wrestling with a very difficult business climate these days,” said Donald Kittell, SIA’s executive vice president. “And, we are wrestling with some tough decisions with respect to the design and implementation of the program. In addition to dealing with a crisis in public confidence, the industry has reduced its information technology spending by as much as 10%. Firms have also committed significant resources to business continuity planning since September 11, something that was not envisioned when we began planning the project in 1999.”

In light of these changes, Kittell said, SIA will reevaluate the industry’s projected costs and benefits of more efficient trade-processing systems over the next few months. At its July meeting, the SIA board of directors will examine the credit-risk benefits and the tradeoffs between credit and operational risks if the trade clearance and settlement cycle were to be compressed to one day from three. Furthermore, the board will study the goals and implementation strategy for straight-through processing, with and without a conversion to T+1.

Kittell said there are other policy issues that need to be addressed within the next few months, particularly the role of the regulatory agencies in the move to T+1. “Straight-Through Processing/T+1 has to date been an industry-driven initiative,” says Kittell. “There are some in the industry who feel that this must be mandated by the Securities and Exchange Commission.”

In reviewing the STP/T+1 project’s accomplishments, Kittell cited examples that are already being implemented. He also praised the volunteers who worked on project teams to identify key policy issues that the SIA is now addressing with the association’s executive committee and board. “We understand the moving parts much better now than when we started,” he said.

“I am confident that the securities industry will successfully design and implement a program that addresses the legitimate goals of risk reduction, cost efficiency, improved functionality, and capacity,” Kittell said.