Welcome to the latest episode of At the Forefront: Fintech Conversations!
To learn more and listen to our previous episodes, click here.
In this episode, ViewTrade President of Brokerage Services James St. Clair joins Forefront Senior Vice President CJ Lengua to discuss a timely topic for the capital markets industry: the transition to T+1 settlement. With the rule change going into effect on May 28, James and CJ discuss the importance of adequate preparation, concrete steps that affected firms can take and the ways ViewTrade is helping its clients get ready for this momentous shift.
To begin, James and CJ review the various aspects of the trade lifecycle that will be impacted by the shortened settlement cycle. With the timeline essentially cut in half, James explains how this will create array of challenges in areas from the escalated payment process and post-trade matching affirmations to client-facing trading platforms and reference data. Even minute details like updates to client-facing documentation, corporate action processing and internal accounting systems will need to be examined.
However, the most critical priority of all will be ensuring the timely funding of transactions. Firms and clients must plan on holding reserves and cash to provide liquidity. As a global firm that currently offers access to both US and international markets in over 26 countries, funding trading activity in a T+1 environment is critical to ViewTrade’s operations.
Next, the conversation pivots to what firms can do to prepare for a T+1 settlement cycle. James stresses that this will require buy-in from the highest levels of management as well as throughout the organization, as it will impact every department, from trading and cashiering to compliance and operations. Firms should scrutinize their existing processes and systems and work toward evolving them to keep pace. A company is only as strong as its weakest link, James emphasizes, and one underprepared element can potentially disrupt entire workflows.
James and CJ then discuss what makes ViewTrade a logical partner to help firms navigate this cross-departmental challenge. For over 20 years, James explains, technology has been the driving force behind ViewTrade’s business, enabling the firm to build a strong track record of helping clients successfully navigate a wide range of industry transitions such as Y2K and T+2 settlement. The team has developed in-house trading technology systems that provide an advantage over other firms that may rely on disparate solutions that are patched together.
ViewTrade has proven to be nimble and flexible enough to change with the times, and its regular communication and needs-based consultation with clients make it a true partner in navigating industry challenges – it is more than just a vendor or service provider. Lastly, James explains, ViewTrade manages its own books and records, with self-clearing as part of its business model, enabling it to produce necessary reports to clients on a timely basis. By reducing the number of links in the settlement chain, ViewTrade can effectively minimize risk in a highly involved transition period such as the shift to T+1.
See below for a breakdown of what was discussed. Happy listening!
Timestamps:
1:25 – Challenges surrounding the transition to T+1 settlement
4:05 – How firms should navigate funding amid this shift
5:30 – Concrete steps firms should take to prepare for T+1
7:35 – How ViewTrade is helping its clients prepare for the shift
