T+1 settlement is not going to be the sort of challenge a COO can throw bodies at. End-to-end automation should be a pre-requisite. Bear in mind that the SEC has already said its eventual target is T+0. Investment made into automation now will pay dividends later. According to the DTCC, the clearing industry has now proposed an affirmation allocation deadline of 9pm ET on the trade date, de facto T+0 or same day affirmation. 

Switching to automated processes means fund managers can meet these Same Day Affirmation (SDA) requirements. The technology already exists. Switching to automated processes for allocation, confirmation and central matching will significantly reduce the number of post-trade exceptions plus associated expensive reconciliation activity.

T+1 will mean that fund managers will need to be alive to the accurate population of upstream trade data, as this will reduce exceptions management downstream on the trade. One critical point of risk management practice is to keep a central database of standard settlement instructions. This exercise can also help firms at this point to identify any issues with trade data processing that might become an issue post T+1.

Currently there are no penalties in place for failing to meet the T+1 deadlines; failure to do so could create additional costs, further SEC scrutiny and also brings with it reputational risk with investors.

Review your own policies and procedures and indeed run them past an independent operational consultant to ensure they are up to scratch and will survive contact with T+1. 

Look at whether any changes or upgrades need to be made to technology systems and connectivity that currently exists with broker-dealers. Address any weak points that might be revealed, including with record-keeping procedures.

Importantly this also may require that COOs revisit their technology stack. This could necessitate modernisation of existing technology and potentially the adoption of other IT solutions. Start talking to IT providers now.

It is essential fund managers liaise as closely as possible at this stage with service providers. This includes co-ordination with any broker-dealer counterparties and finding out what they will be expecting when T+1 deadlines approach. 

Service providers will be pushing ahead with their own plans, and COOs will need to be fully appraised of what is going to be different and how far along service providers are with their objectives.

Non-US fund managers that regularly trade US stocks will need to revisit their US service provider and broker dealer relationships to ensure plans are in place. In addition, they will need to make sure current arrangements with spot FX providers to facilitate USD financing for transactions are in place, as the time horizon for these is going to become constricted. 

Non-US fund managers may need to make further provision for staffing and trade support outside their normal market hours (e.g. late in the day US time) and consider further service provider appointments within US time zones.