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CHAPTER NINE | RISK MANAGEMENT
SETTLEMENT PERIOD
(2024) (1993) T T+1 T+2 T+3 (2017)
Transaction Date
Settlement Date
Business Days
that are actively looking and working toward building new capabilities. This creates exciting opportunities for us to help lead the digital transformation of the global markets. Any highly regulated organization that manages critical and highly complex systems must balance innovation with stability. Around 2018, DTCC established its Business Transformation Office to explore more efficient ways of operating, among other responsibilities. Instead of a “waterfall development,” where a client might not see the development of a product for months or years, DTCC moved to a concept called “Enterprise Agile.” The concept required that the firm’s development, business and quality control teams work under one roof as tribes, aligning into cross-functional teams that would report to one person. The approach would serve as a major cultural shift for DTCC, allowing teams to work in short iterations and become more nimble, enabling the company to provide value to its clients at a much faster pace.
In the effort to better limit its risk exposure, DTCC led the financial industry in reducing settlement time to trade plus two days through its T+2 initiative. The primary benefit was to reduce risks for individual investors and financial markets, including credit risk, market risk, liquidity risk and, as a result, systemic risk. The shortened settlement cycle would also result in reductions in liquidity needs and global harmonization with other T+2 markets.
Accelerating Settlement Again
DTCC’s focus on innovation took many forms during the 2010s. While the firm was actively exploring new technologies, it was also advancing large-scale, industry-wide initiatives to strengthen the industry market structure. One of the most prominent bodies of work was further accelerating settlement in the US capital markets. DTCC has long emphasized that delays in settling created more risk, so it helped lead the industry in reducing settlement time from trade date
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