Preparing for T+1 Settlement
Risky Business: Managers Brace for T+1 Deadline
Welcome to FundFire's weekly News Brief.
As next Tuesday's?deadline?for firms to move to a single-day, or T+1, settlement cycle approaches, some asset managers are still scrambling to make sure they have the right systems in place to comply.
Smaller shops relying on their custodians to handle the issue are the most at risk,?Robert Walley, a principal of financial services at?Deloitte, told FundFire.
"You can't just punt," Walley said. "I don't think you have the luxury to be the firm that can't handle a series of settlements."
Asset managers must prepare in case trades fail or do not settle on time.
"A lot of clients are trying to figure out how to either pre-position cash or make sure they have other mechanisms in place to cover fails and cover the need for funding," said?Donna Milrod,?State Street?'s chief product officer.
But the new trade settlement rule is hardly the only regulatory change on industry leaders' minds.
Last week, the?Securities and Exchange Commission?enacted a?rule update?that will require industry firms to tell clients when their information is leaked through cyber attacks or other breaches. The update also expands the scope of what type of sensitive-information leaks would trigger the disclosures.
In addition, the SEC and the?U.S. Department of the Treasury's Financial Crimes Enforcement Network?last week?proposed a rule that would tighten anti-money laundering and counter-terrorism regulation by requiring registered investment advisors and exempt reporting advisors to verify the identities of the customer.
That means the regulation would apply to many industry players, including traditional asset managers,?James Downing, a senior principal consultant at?ACA Group, told FundFire.
"Larger institutions probably won't feel this as much as the smaller firms," Downing said.
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Chart of the Week
As regulators push an aggressive rulemaking agenda, the asset management industry has?spent handsomely?on lobbyists meant to influence regulation and other government policy, disclosures show.
-Graphic by Michael Taffe
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