When the SEC adopted final T+1 rules, the agency instituted new requirements around same-day affirmation practices for both broker-dealers and certain institutional investors to help ensure timely settlement in a T+1 environment. Importantly, the requirement for broker-dealers is that they take certain actions so that 100% of all trades are affirmed as soon as technologically practicable and no later than the end of trade date, as reinforced by FINRA in a recent regulatory notice.

In support of T+1 preparedness, in January 2024, DTCC published an Affirmation Report which recommends that, for the purposes of the relevant cut off times for trade submission to DTC, the industry affirm at least 90% of all trades by 9:00 PM on trade date. This recommendation derives from analysis we conducted based on DTC-submitted trades currently affirmed on T+1 that settle under the current T+2 timeline.

Our analysis shows that in December 2023, as reported in DTCC’s Affirmation Report, 69% of transactions were affirmed by 9:00 PM on trade date. In January, this number increased to 73%. When considering specific market segments as of the end of January 2024,

• Prime Broker Affirmation Rate: 81% • Investment Manager Auto Affirmation (central match) Rate: 92% • Custodian or Investment Manager (self) Affirmation Rate: 51%

To ensure preparedness and improve affirmation rates, we highly recommend market participants leverage automated central trade matching solutions with workflows that automatically trigger trade affirmation and the delivery of DTC-eligible securities directly to DTC for settlement when a trade match between an investment manager and executing broker is achieved. At the same time, firms should ensure their buy-side clients are aware of their responsibilities around same-day affirmation. By automating post-trade processes, increasing communication with counterparties and adopting best practices, industry participants will be better placed to achieve T+1, maintain existing market efficiencies and contribute to a safer, more efficient marketplace.”