CCPs are encouraged to review their trade netting processes, and communicate their netting/aggregation methodology for trades over transition date. AFME encourages the CCPs not to deviate from their usual netting process and to explain the process pre-transition. AFME anticipates an increase in settlement volume on 8 October, especially on-exchange transactions. Market participants and infrastructures should ensure they have sufficient staff available to manage over this migration date and the subsequent weeks to cope with any transition issues.
AFME recommends that, in markets which have a settlement discipline regime (late settlement fines), this regime is temporarily relaxed until the end of October 2014. In-scope CSDs are encouraged to be flexible and prepared to support all market participants with regard to their deadlines on 8 October and thereafter given the spike of volumes on this date and In-scope market infrastructures are requested to formally communicate their readiness /’go-live’ status to participants for the transition to T+2 over the weekend of 4 - 5 October. Additionally, market infrastructures should make test environments available to their participants in advance of the migration.
Market participants are encouraged to review their central bank settlement liquidity needs across the in-scope markets to support the spike in settlement volumes on 8 October. During this transition phase and perhaps sometime thereafter, securities inventory management and borrowing activities may be challenging. Throughout that period, there may be a risk of a temporary decrease in available securities on loan, which could lead to further settlement fails.
Full briefing note
© AFME
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