sorry if this story is a duplicate - but i thought it was worthy of sharing.
SIA TO REVIEW T+1 MOVE, CITING BCP, COST CONCERNS
By Shane Kite
Senior Staff Reporter
Wall Street firms’ shrinking IT budgets amid the down economy, a shift in priorities to business continuity planning (BCP) after Sept. 11 and the thorny, post-bubble legal and regulatory climate are all prompting the major proponent of next-day settlement, the Securities Industry Association, to shift gears and re-evaluate the feasibility of moving to T+1 by 2005.
SIA EVP Don Kittell told those attending the SIA operations conference yesterday in Palm Springs that the SIA board will meet in July to “evaluate carefully and completely the risk-reduction benefits of T+1, just as a stand-alone issue.” Whether the SIA will take T+1 off the table, or change the 2005 deadline, will be debated in July to determine where the most support lies.
Some industry leaders contend that not only are the risks of T+3 settlement acceptable today, but the lag in trade completion mitigates operational risk by allowing recovery time in case of a disaster, a rising concern since Sept. 11 interrupted the market system.
The high-level nature of the BCP focus was evident at the conference, as the U.S. Depository Trust & Clearing Corp. announced that it was finishing up negotiations to make operational in 12 months a new third data facility located 1,400 miles outside of New York City to boost its backup scheme. The New York Stock Exchange revealed plans for members to convert to a system that will retrieve all orders over a TCP/IP network vs. the only 30 percent that came in this way before Sept. 11. The Securities Industry Automation Corp. unveiled the Secure Financial Transaction Infrastructure, or SFTI (pronounced “safety”), a marketwide project to provide communications independence for the financial industry. And the Bank of New York announced it was working with IBM and Ernst & Young on a 12- to 24-month project to run three geographically diverse data centers.
While Kittell wouldn’t name names, he described the dollar amounts involved in settling current legal battles and other claims as “very scary.” A source said dealers including Merrill Lynch--which is reportedly trying to settle the New York Attorney General’s probe into its alleged analyst conflicts--are seeking a policy shift from the SIA to focus on immediate matters. The buy side has also questioned the projected costs in converting to T+1, a concern both the SIA and the Securities Exchange Commission say they are trying to address.
Securities Industry News |
