The T+1 War Room initiative, launched by Global Custodian and The ValueExchange in partnership with Citi, Delta Capita and Xceptor, brought together industry experts to share their experiences, challenges, and successes in navigating the critical shift to T+1 in Asia Pacific. The rollout has been characterised as “cautiously positive”.
While the shift to T+1 and subsequent adoption around the world has been hailed a huge success, part of the War Room initiative was to unearth any issues and one issue around automation and affirmations did arise during the discussion.
While automation has streamlined many processes, some manual interventions were still necessary to handle exceptions and ensure smooth operations. One expert from a data automation platform said, “The general level of preparedness having automated a lot of these processes early on, has put them in a better place for this [T+1] to go live.” This highlighted how firms in Asia have maintained additional resources to monitor and address any issues that may arise, ensuring stability during the initial phase of the transition.
One product manager shared that when the affirmations dropped 91-92% on 31 May, it was likely due to time zone differences, especially for affirmations from Asia, where staff might not be as available on Saturday mornings to meet US Friday evening deadlines. 
They said: “You won’t have someone sitting in the office in Asia on Saturday morning trying to meet the US Friday evening deadlines, and as a result there’s a slight drop in affirmations and matching. I think if affirmations were still being supported manually, and you just didn’t have staff in the office during Saturday morning APAC hours, then that would pose a challenge to some degree.”
Another capital markets consultant chimed in, stating, “There’s probably a little less automation than people admit, especially with the vendors.” They emphasised the need for consistency in covering Friday evening and Saturday morning, raising questions about the willingness to maintain this level of commitment. Furthermore, they highlighted the importance of identifying gaps in automation, suggesting that neglecting Saturday morning operations is not an option.
Unveiling challenges and affirmations
The War Room kicked off with a discussion on the survey results, revealing insights into the challenges faced across various operational areas in the APAC region. From affirmations to FX execution and funding gaps, participants shared their experiences, rating the severity of challenges on a scale from one to five. Interestingly, while challenges were acknowledged, the majority expressed confidence in their operational preparedness, mirroring trends observed in Europe and North America. 
According to the survey results, most respondents reported performing better than expected in trade affirmations, with 25% indicating an improvement. Additionally, 25% of respondents reported better-than-expected performance in manual exception handling. These findings suggest that many participants have exceeded their initial expectations in these areas, reflecting proactive measures and effective strategies implemented to navigate the challenges of the T+1 transition in Asia.
Despite initial concerns about readiness, the panel noted that the APAC region was perceived as the least prepared for the transition to T+1. However, the positive trade affirmation rates observed following the implementation suggest a different narrative.
The high rates indicate that major efforts have been made to consolidate processes, automate tasks, and adopt self-affirmation models. These proactive measures have evidently contributed to the improvement of affirmation rates, highlighting the effectiveness of the collaborative efforts undertaken to address challenges and enhance operational efficiency in the region.
As one speaker noted, “The good news is that everyone seems to be not really experiencing any problems. So that’s consistent with what we’ve seen across Europe, as well as the US or North America at this point.”
Preparation and high-touch support
Preparation emerged as a recurring theme throughout the discussion, with Asia-based firms emphasising the importance of establishing dedicated war rooms and mobilising resources to address anticipated challenges. From global command centres to localised operational hubs, the focus was on ensuring high-touch support and responsiveness to queries.
Phillip Van Dine, APAC head of banks & market infrastructure at Citi, shared insights into their approach about their past week across their Asia operations since the implementation of T+1 in the US, stating, “We’ve brought people from Asia to our primary T+1 command centre to ensure we had a high touch approach because we expected a number of queries to come in and we wanted to make sure we had the right level of responsiveness. We anticipated some credit liquidity challenges, so we made sure that we enhanced our monitoring and implemented short-term credit increases where needed. Our affirmation rates and settlement rates were as expected. The transition to-date has been relatively smooth.”
Van Dine added, “After a week, we’re ready to move into our new BAU processing. We’re still going to maintain a certain level of resources, just until we’re comfortable that the whole market has shifted because we’re still seeing some residual questions from clients.”
Adapting to the new normal
Client and investors have further detailed their initial experiences amidst the T+1 transition, ranging from adjusting operational schedules to embracing automation. An investor on the panel mentioned that since the T+1 live date, their main goal has been adjusting their booking schedule to get people to start work slightly earlier.
They said, “At this point in time, we’re focused on staffing to cover the hours, but we hope to implement automation gradually, considering our manageable volumes. The main adjustment of working hours is what is helping us get through the data process at this point in time.”
In response, a Van Dine added, “We’re still seeing some clients sending in their actual settlement instructions beyond the cut-off time. We expect some clients to adjust their operating hours to accommodate the new cut-off times. However, we’re communicating with those clients to highlight where they’re missing cut-offs, ensuring settlements are managed efficiently”.
Another fintech said, “For our clients it’s generally been smooth. I think overall, it’s rolled-out better than expected, but it’s still kind of early days, so people are kind of watching what’s going on. The general level of preparedness having automated a lot of these processes early on, has made put them in a better place for this to go live.”
Anticipating evolving dynamic
Looking ahead, participants acknowledged the evolving nature of the post-T+1 landscape, with a focus on addressing potential impacts on funding costs, margin requirements, and settlement processes. Despite the ongoing hurdles, there was a shared commitment to collaboration and engagement across the speakers in the war room.
One consultant expressed the need for continued innovation, stating, “The misalignment between security and financial protections is something might be worth delving into. That’s a good exercise, because we’re flushing out what can be done versus what needs human intervention.”
Another custody product manager reflected on the operational aspects of trade affirmation, noting, “It seems to be more just like operational because we did have a fairly sizable group of clients that just hadn’t been affirming before.”
They highlighted the learning curve associated with transitioning to a self-affirmation model, describing it as a process of training and understanding the workflow. He pointed out a challenge encountered in aligning trade instructions with self-affirmation timelines, which could lead to cancellations by DTCC and unexpected costs for clients. They characterised these challenges as primarily behavioural rather than stemming from inherent risks or inventory issues.
Another emphasised the importance of understanding the true significance of trade affirmation, stating, “We’ve had to educate clients for the last year or more, on what is affirmation. It’s just an indication of an intent. It doesn’t guarantee anything, it doesn’t mean it’s going to sell, it doesn’t mean it’s going to fail. So, in that respect, we’ve spent a lot of time telling clients it doesn’t really mean anything other than you, indicating the intent to sell.”
They further elaborated on the complexities of achieving 100% affirmation, particularly when clients rely on custodial affirmation. The challenges of meeting deadlines and conducting necessary checks make full affirmation inherently difficult, he said, and concluded that, from his perspective, there are no unforeseen drawbacks to this approach.