On Jan. 17, OCC issued bulletin on change in securities settlement.
OCC issued Bulletin 2024-3 to highlight actions that banks should take to prepare for a change in the standard securities settlement cycle for most US securities transactions.
Follows SEC 2023 final rules that shorten settlement cycle from T+2 to T+1, #128801.
Replaces and rescinds Bulletin 2017-22 and Bulletin 2018-15, see rule #32668.
Highlights
Banks should prepare to meet time frames for T+1 settlement cycle for trades related to banks’ securities activities, including activities re investment and trading portfolios.
Also securities settlement, servicing provided to banks’ custody and fiduciary accounts.
Banks that offer retail nondeposit investment products through a broker-dealer should assess the broker-dealer's preparedness for the new settlement time frames.
Evaluate bank preparedness and employ effective change management processes.
Identify all business, products, activities involving securities settlement, servicing.
Bank management should monitor regulatory changes that affect securities settlement and servicing, and system and process changes at financial market utilities.
Custodians’ system, process changes, third-party system or service provider changes.
Establish and follow an appropriate project plan to address these changes.
Consider specified factors including, among others, changes to credit and counterparty credit risk management, changes to client contracts, updates to third-party oversight.
Implement appropriate risk management system for the new and modified activities.
Third Party Management
For many banks, most changes to implement T+1 will be completed by third parties.
