With the U.S. securities market converting to a T+1 standard settlement cycle on Tuesday, "all transactions need to match perfectly with counterparties on the day a trade takes place, leaving very little room to correct issues," according to Claire Santaniello, managing director and head of operations for BNY Mellon's Pershing.
ThinkAdvisor caught up with Santaniello, who leads initiatives to help broker-dealers and wealth management firms meet new compliance requirements, as the T+1 countdown closed in.
BNY Mellon was among the first firms to build a T+1 preparation program in 2021, according to the financial services giant.
The industry, according to Santaniello, needs to be educated on best practices in order to comply with T+1. She explained in the interview with ThinkAdvisor how BNY Mellon has been prepping for the T+1 transition and details other new rules taking affect in May.
THINKADVISOR: What has the testing revealed that BNY Mellon has been conducting regarding readiness for T+1?
CLAIRE SANTANIELLO: Since last August, BNY Mellon, along with other firms, has participated in rigorous industry testing in collaboration with the Depository Trust and Clearing Corporation. We also prioritized business testing, testing with clients, clients' vendors and our own vendors across our various lines of business, including BNY Mellon's Pershing.
All of this testing has enabled stakeholders across the industry to look holistically at the impact T+1 will have on all of our processes, and work together on solutions for not just our clients but the industry as a whole. A good example of this is the extensive testing we did collectively for different regional events and circumstances, such as holiday and corporate action processing.
It's been hard work, but after executing thousands of test cases, we feel prepared that our systems and processes can handle all the complexity a shorter settlement cycle involves. We're ready to support clients on go-live day.
You said T+1 touches the whole lifecycle of a transaction. Please explain.
A common misconception is that T+1 is just about the settlement process, but it impacts so much more, starting at the beginning of the lifecycle. Case in point: The account opening process is key to ensure that settlement instructions are properly set up to meet the new affirmation requirements.
We've been helping firms with this readiness component through metrics and reporting tools that can help give firms a better understanding of how they're doing and where they may be facing challenges within client accounts.
