ETD Data is Key.png

Data is key to reconciliations mandated by T+1 migration

This article was first published in Global Investor Group.

Accurate and timely data are one of the key challenges faced by asset managers as they prepare for the migration to next-day, T+1 settlement in the US, according to a new report.

The paper from Gresham Technologies found that 55% of respondents to its poll said data accuracy and timeliness is a top three reconciliation problem as the number and complexity of their data feeds have proliferated in recent years.

Nine in ten of the 200 heads of operations at asset management, fund administration or alternative investment firms said their number of external data feeds had increased over the past year.

The other top problems for the respondents were identifying the root cause of trade fails (55%) and implementing controls (52%), the paper released on Tuesday found.

Neil Vernon, chief technology officer at Gresham Technologies, said: “Increased volumes, velocity and complexity are causing a complicated data deluge for the investment management community.”

Vernon added: “For asset managers and hedge funds to address this, it is absolutely essential that they be able to identify the root cause of fails and invest strategically in their operations. This all comes back to availability and quality of data, and as we have found in this process – firms are flooded with too much data to effectively and swiftly normalise, validate and utilise across operations.”

Gresham said the issue is coming to a head as firms start to think about their preparations for the US and Canadian move to T+1 from T+2, currently slated for late May 2024.

Technology firms have in recent weeks been keen to stress the operational challenges associated with the cut in the settlement cycle first mandated by the US Securities and Exchange Commission.

Torstone Technology published a report on Thursday pinpointing the impacts and challenges of a T+1 settlement cycle in US and Canada for British firms trading in the US.

The head of domestic custody at European exchange SIX Group said last week the aggressive US migration to T+1 poses a big challenge for Europe as the US and Europe compete for international business.

Earlier this month, a panel of experts at the FIX EMEA Trading Conference 2023 addressed the move to a T+1 settlement, and the implications for the UK and European markets.

Contact us to discuss how we are helping to make T+1 settlement possible.


Related Insights

  1. Article
    The force of the community data model applied to reference data is consistent and progressive but at times supercharged in its reaction to fundamental market change. The real time use of reference data in daily trading operations offers a dynamic exposure to prove, or not, data quality and is an essential part of an inclusive quality assurance process.
  2. Article
    In a response to a US Securities and Exchange Commission (SEC) consultation on proposed rules to strengthen oversight of custody and securities lending by investment managers, the New York-based trade body said the rules are too widely drafted, potentially hampering the use of derivatives on behalf of clients which could affect liquidity in the wider market.
  3. Through this partnership, ETD will provide its clients with access to Options’ high-quality data, utilizing a pre-deployed technology stack that consumes, translates, and broadcasts normalised tick data. This will provide ETD's clients with comprehensive access to the global FX and CFD markets.