SHORTENED SETTLEMENT CYCLE: NORTH AMERICA

U.S. Bank assembled a cross-functional T+1 project team that spans multiple disciplines internally and has activated governance forums in preparation for T+1. In addition, U.S. Bank product and operations teams conducted a 10-week intensive impact assessment to jumpstart the T+1 program earlier this year. There is ongoing data and business analysis to identify changes to our processes and technology to ensure readiness, with three main objectives:

1. Identify opportunities for operational efficiency to reduce the impact of moving to T+1;
2. Analyze post-trade performance of U.S. Bank and clients to understand challenges to settling T+1; and
3. Client outreach activities to ensure changes required ahead of the T+1 go-live date are communicated.

Yes. U.S. Bank has resources in the U.S. and Europe dedicated to the monitoring and planning for regulatory changes and market developments. As such, we have been anticipating the move to a T+1 settlement cycle and began our discussions relative to the planning and resourcing over a year ago. A core T+1 project team has been put in place as we work to comply with the move to T+1. This team consists of resources across project management, project execution, operations, technology, product, foreign exchange, securities lending, business unit teams, legal, regulatory, risk, compliance, etc. We recently completed an impact assessment of T+1 which further informed our internal and client roadmap.

In addition to the T+1 overall project team, specialists from custody product are the overall leads for this initiative. Doug McNaughton from WCIB’s chief product office is the overall lead for our T+1 readiness program. In addition, Laura Cote, also from the WCIB chief product office, is leading the communications workstream. Both Doug and Laura are based in Boston.

Please coordinate through your relationship manager, custody administrator or trade services analyst. Also, please note that someone from the above team(s) will be reaching out to you proactively if we identify through our data analysis that your activity could be improved ahead of T+1. Examples of potential changes include optimizing the affirmation process or your current model, how you currently instruct U.S. Bank for trade instructions, and the use of industry utilities such as DTCC ALERT^® global custodian direct (GCD) for SSI management.

1. Affirmed ID Confirm: Upon receipt of a valid affirmed confirm from DTC, the transaction will automatically pend to the underlying custody account. 
   Note: Clients who have block settlement are not eligible for the Affirmed ID Confirm processing option.
2. Automated Transmission: U.S. Bank will receive a confirm from DTC and an automated instruction from our client or their advisor. Upon receipt of both instructions, U.S. Bank’s custody system will attempt to match both instructions together as long as both the confirm and automated client instruction are in good order.
   1. If matching does not occur, the transaction will pend to the underlying account unlinked to the affirmed confirm. We accept automated instructions through several channels (Pivot, SWIFT, sFTP, Trade Hub, Bloomberg and more).
3. Manual Client Instruction: U.S. Bank will receive a confirm from DTC and a manual instruction from our client or their advisor. Upon receipt of both instructions, U.S. Bank’s Trade Services team will attempt to manually match the client instruction to a confirm as long as both confirm and automated client instruction are in good order.
   1. If matching does not occur, the transaction will be manually pended to the underlying account unlinked to the affirmed confirm.
   2. This is U.S. Bank’s least preferred method and we will be working with our clients to transfer to one of the more automated trade transmission methods noted above.

Yes, U.S. Bank trade instruction deadlines will be changing to support the new DTCC affirmation cutoff time, which is confirmed for 9 p.m. EST on the trade date (T). Please refer to this DTCC document for T+1-eligible financial instruments.

The official, full updated deadlines document that includes trades and FX deadlines will be posted to Pivot MarketWatch ahead of the T+1 effective date.

Note: Canada and Mexico (pending regulatory approval) trade, FX and securities lending deadlines will be established once finalized with our local custodians. In addition, please note that manual trades are our least preferred transmission method and should be automated ahead of the T+1 effective date.

Below is a high-level view of the U.S. deadlines.

Trade deadlines:

On trade date (T):

• Automated trades: 8 p.m. ET (Affirm ID confirm, SFTP, SWIFT, U.S. Bank layout Pivot)
• Manual trades: 5:30 p.m. ET

Securities lending deadlines:

In addition, for accounts participating in the securities lending program, sell instructions must be received by the following times to support the notification to the borrowing party to ensure recalls are returned in time to support settlement.

On trade date (T):

• Automated trades: 1:30 p.m. ET (Affirm ID confirm, SFTP, SWIFT, U.S. Bank layout Pivot)
• Manual trades: 12:30 p.m. ET

U.S. Bank prefers clients or their advisors to be the affirming party on T+1 eligible transactions. Alignment with this model allows for greater automation and increased straight-through-processing (STP) rates. However, U.S. Bank does have the ability to affirm trades on behalf of our clients or their advisors if trade confirmations are correctly billed to a U.S. Bank Institution (Agent) ID and trades are relayed to U.S. Bank in a timely manner.

Please contact your Trade Support Analyst (TSA) for any questions on Standard Settlement Instructions (SSIs) including U.S. Bank Institution (agent) IDs.