America’s Securities Industry Association (SIA) has postponed the introduction of T+1 settlement in the US from 2002 and recommended June 2004 instead. In a report commissioned by the SIA, Andersen Consulting and The Capital Markets Company estimate the transition from T+3 will take three and a half years from the outset. Conversion is only due to begin later this year, hence mid-2004 as the new target.
“Based on the interviews we concluded and the responses we received from the T+1 survey, we feel that this is a reasonable target date,” says Diane Frimmel, chair of the SIA’s T+1 subcommittee. Postponement will come as no surprise to numerous critics who have long maintained 2002 was an unrealistic deadline.
According to the report there are ten areas in need of reforming if the transition is to suceed. Those include the adoption of internal trading systems to comply with shorter settlement deadlines, electric payment by retail customers and the submission of near real-time information by exchanges and institutions.
Andersens and The Capital Markets Company surveyed using the internet and received answers from fifty-six firms.