By David Tomkins, VP EMEA, Financial Services, Unqork
In May 2024, the US is set to adopt the T+1 standard, cutting in half the standard settlement cycle for most broker-dealer transactions in securities from two business days (T+2) to one (T+1). Meanwhile, the rest of the world is following suit. India implemented T+1 in January, 2023. Canada is set to make the switch in May 2024, along with the US.
And now the UK and the European Union are now feeling the T+1 pressure.
The UK’s Accelerated Settlement Taskforce says it will decide on T+1 by December 2024. Because the European must coordinate across so many national borders and institutions, it is likely to take longer. But to remain competitive as the rest of the world goes T+1, the European Union is sure to follow suit.
In other words, the clock is ticking, and UK and European financial institutions need to start considering how they are going to achieve T+1 now.
Do we really need T+1?
Yes, we do. Sure, it increases pressures on financial institutions in the short run. But faster settlements are good for the markets and the economy, because they increase liquidity and lower the risks that can arise during times of market volatility.
But that is not all. They also benefit both sides in trading transactions by:
- Reducing credit and counterparty risk
- Increasing efficiencies in cash deployments
- Increasing market liquidity
- Lowering collateral requirements
Does T+1 make you anxious? Maybe that’s a good thing.
If you’re worried about what T+1 means for your organisation, is it because you manage trade settlements today with lots of manual and email-based processes? Or maybe you have built your settlement systems with not-so-low code apps that are difficult to change and costly to maintain? Or is it because you have an unknown number of complicated spreadsheets and custom Excel macros hidden in your teams’ My Documents folders?
There is little doubt that it can be painful when you are forced to automate and digitize existing manual processes. And it can be even worse when you have to change existing custom solutions to meet new regulations.
The good news is, it can be far less painful than you think (I explain why below). And once you make it happen, you start reaping many more benefits than just being compliant with a new regulation. You lower operational costs by eliminating manual processes. You reduce the risk of costly manual errors. And if you adopt a codeless approach to building, maintaining and evolving the systems you need to support T+1, you can then scale your codeless infrastructure to virtually any other part of your business.
To make settlements frictionless, go codeless
Compliance with T+1 is all about automation. By letting technology automate as many settlements as possible (in a secure and compliant way, of course), you can focus your settlements team members exclusively on exceptional cases that require human intervention.
The good news is, codeless development makes it much faster and easier to support STP—and achieve T+1 deadlines. It also makes it much easier to evolve solutions as requirements change over time. To be clear, we are not talking about “low-code” (or even “lowcodenocode” as some companies frame themselves). These development paradigms still require code, often lots of it. To understand the difference between codeless and low-code/no-code, read an earlier article I wrote here.
The good news is, codeless development makes it much faster and easier to support STP—and achieve T+1 deadlines. It also makes it much easier to evolve solutions as requirements change over time
Instead, I’m talking about 100% codeless development, built on an entirely codeless architecture. Large banks are already using Unqork’s codeless development platform to accelerate and extend STP. For example, one major US bank automated post-trade exception management for its FX business with a unified set of STP capabilities, thanks to Unqork’s robust exception management workbench that supports automatic routing (e.g. trade confirms)—all without writing a single line of code.
Such a good fit for Unqork…so we built it!
You can solve some seriously complex business problems by building some amazing codeless applications on Unqork, and it’s fair to say T+1 was too good an opportunity to miss! Our teams have configured (not coded of course) an app-accelerator that enables you to start the process at 50-60% done, so you get to market even quicker with key capabilities in place. There are a lot more detail here, but some of my favourite capabilities include:
1. The ability for operations teams to create, manage, and edit their own exception resolution workflows, without the need to queue change requests with IT
As new patterns and new exception types emerge, operational supervisors can configure processes to resolve them from their own dashboards. They can identify steps of execution, deadlines, approval pathways, integrations and more, ensuring that automation does not require constant “back to the developers” overhead.
2. Fully auditable interaction history in Unqork and via third-party communication tools
End-to-end integration with technology like Slack or Teams enables exceptions to be spun out into your organisation’s collaboration tool of choice. This ensures resolution is fully collaborative across any and all of your operational team members, using tools already familiar to them—all whilst retaining full auditability in Unqork.
3. Control, and provide access to, core data sources and systems in a unified, intuitive workspace
Through seamless integration with your core trading systems, as well as other enterprise technologies such as document management platforms, collaboration tools, and operational systems both modern and legacy, you can automate processes wherever possible. And where manual intervention is required, you can provide a single source of information for your operational teams to resolve issues without alt-tabbing or swivel chairing.
Our customers are already solving complex operational processes like T+1 on Unqork’s codeless architecture. If you want to learn more about how codeless can make your path to T+1 faster and smoother then just ask for a demo of the platform and of Unqork’s T+1 accelerator app.
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