How T+1 Compliance Can Help Securities Firms Jumpstart Digital Transformation — and Why Integration Matters

By Boomi

The countdown is on for T+1, posing a monumental challenge to securities firms in the U.S. and Canada.

If all goes as expected, firms by April 2024 will be required to settle equity trades within one business day post-transaction (T+1), a two-fold acceleration from the T+2 settlement standard in place since 2017.

As professionals in the securities industry know, cutting settlement cycle time in half is a very, very big deal that demands large-scale technology and operational changes across complex IT and processing ecosystems.

“While the transition to T+2 settlement was viewed as ‘tightening the belt’ for many operational processes, many consider the transition to T+1 to require significant re-engineering of market and business functions, including the advent of advanced technologies,” Deloitte says.

T+1: An Opportunity to Jumpstart Digital Transformation

At Boomi, we’re poised to provide the integration and automation capabilities that securities firms need for the T+1 transition. As outlined in a new Boomi executive brief, modern integration can help firms address T+1 challenges including:

  • Modernizing outdated legacy IT environments
  • Shortening conventional batch processes
  • Automating widespread manual work
  • Consolidating and utilizing siloed data

Though T+1 is a challenge, it’s also an opportunity for securities firms to jumpstart broader digital transformation. A flexible integration platform like Boomi’s can help firms in areas such as customer experience, operational efficiency, risk reduction, data analytics and reporting, and exposing data for new insights across an organization.

Industry leaders believe that the securities landscape is ripe for innovation. Firms need ways to digitize operations without jeopardizing mission-critical processes that have proven rugged and reliable for decades, yet aren’t well suited for T+1 compliance.

“The global securities landscape is on the verge of transformation, with new technologies and digitalization efforts poised to deliver major efficiencies and potential savings,” a Citi Securities Services report says. “This represents a radical change for an industry historically fragmented in terms of technology, operating models, and process inconsistencies.”

The Weaknesses of Conventional Integration

For both T+1 and broader transformation, firms are rethinking conventional application and data integration. As it is, dozens of systems in the settlement cycle are connected by point-to-point custom coding or legacy enterprise service bus (ESB) technology.

Both integration approaches are complex, inflexible, and burden IT teams with extensive maintenance and technical debt. To complicate matters, legacy integration typically operates in periodic batch cycles, often overnight—a sizable obstacle to achieving T+1.

Along with modernizing core settlement systems, firms would benefit from modernizing their integration frameworks with flexible, cloud-native integration platform as a service (iPaaS) technology.

Boomi equips securities firms to meet the integration challenges of T+1. We pioneered the iPaaS space and have remained a market leader ever since, with the largest customer base of any iPaaS provider and a network of more than 800 partners.

Download the executive brief for a deeper dive into the top four benefits that Boomi offers to securities firms:

1. Flexibility to Quickly Connect Systems

Legacy modernization is top of mind as firms approach T+1. Upgrading or replatforming legacy technology is seen as the most important factor for enabling T+1, cited by 46 percent of respondents in a Citi Securities Services survey.

Boomi’s flexibility lets IT architects use and connect their systems of choice. For firms that wish to leave legacy mainframes in place, Boomi helps incorporate those mainframe systems into a more modern and agile hybrid IT environment.

With proven connectivity to more than 1,000 endpoints, Boomi lets developers use generic or pre-built connectors, or create APIs, to connect any combination of on-premises or cloud systems. IT architects have flexibility to run Boomi in a private or public cloud, or deploy it on-premises, as their needs dictate.

2. Near Real-Time Integration

Batch processing has a high impact on T+1 adoption in terms of processes, technology, complexity, and difficulty, according to the T+1 Securities Settlement Industry Implementation Playbook. Industry leaders agree, citing batch cycles as the #2 biggest challenge to T+1, the Citi Securities Services survey found.

Boomi gives firms the latitude to use the optimal processing cycle for a given use case, from near real-time data synchronization to overnight batch. Batch may make the most sense in some scenarios, while other use cases demand near-instantaneous data exchange.

Boomi is used for scalable near real-time integration at large enterprises with highly demanding workloads. High availability, load balancing, automatic failover, and 24/7 visibility with process monitoring for fast issue identification and resolution give IT architects confidence in the speed and reliability of their integration framework.

3. Workflow Automation to Minimize Manual Work

Widespread manual work throughout the settlement cycle brings financial and operational risk and high costs. Though firms have automated in some areas, manual data entry and process execution remain commonplace.

“Currently, securities settlement involves a series of mostly manual processes that are prone to risk, high costs, and operational stress,” as Deloitte puts it.

Technology to create and execute workflow-driven process automation is a core component of the Boomi AtomSphere platform. Boomi brings together applications, data, processes, and people to automate manual tasks, helping organizations reduce time, resource requirements, and risk.

Boomi continues innovating with hyperautomation capabilities that go beyond traditional workflow automation to include artificial intelligence and machine learning (AI/ML), event-driven and structured process automation, robotic process automation (RPA), and more. These capabilities help firms innovate for T+1 and beyond.

4. Unlocking and Standardizing Diverse Data

Data across settlement cycles suffers from two problems. One, it’s often in siloed legacy systems, making it difficult to access for reporting and analytics. Two, it exists in various formats and data types that are hard to manually combine or reconcile into a uniform standard.

The Boomi platform equips firms to improve data accessibility, quality, and governance. With data unlocked from legacy systems, standardized, and moved into a data warehouse or other repository, firms are positioned to apply analytics and reporting that benefit both the firm and its clients.

“Reporting is a key area where marked improvements are needed especially as we are facing greater pressure from clients about the timeliness and accuracy of reporting,” says Martin Palivec, Head of Securities Services, Canada, Citi. “Moving forward, we need to be able to inform clients about their trade statuses and instructions almost immediately, and this is something that cannot be handled manually.”

Future-Proof Flexibility and Resilience

As firms strategize over T+1, unifying the vast fintech ecosystem—from AS/400 mainframes to a Blockchain platform—should not be overlooked. Firms that make agile, cloud-native integration a priority will be poised to meet the challenges of T+1.

Looking ahead, those firms will also gain future-proof flexibility that supports digital transformation. They’ll have resilience to adapt to future disruptions, such as a potential move to T+0 (same day settlement), or even what’s known as immediate atomic settlement, by which trades would be settled almost instantaneously.

To learn more about how Boomi can help your securities firm adapt to the challenges of T+1 and beyond, read our T+1 executive brief  and contact Boomi experts to further discuss your needs.