Duncan Carptenter
Duncan Carptenter
Duncan Carpenter is Director of Product Management at Pirum, where he has led key initiatives in post-trade automation and regulatory reporting since joining in 2013. With prior experience in securities finance at eSecLending, Duncan is a recognised expert in SFTR and represents Pirum on several industry groups, including the UK’s T+1 Accelerated Settlement Taskforce.

Recalls and returns are key to T+1 compliance

In its latest update to the UK Implementation Plan, the UK’s Accelerated Settlement Taskforce (UK AST) has again highlighted the importance of automated securities lending recalls and return instruction flows for achieving T+1 compliance. 

The updates reflect the UK AST’s alignment with ESMA’s T+1 roadmap. Both are steadfast in recommending “end-to-end automated processing”, and that automated recalls and returns in particular will be pivotal for successful accelerated settlements.

The UK AST also added a clarification to SFT 02: “The market expectation is that borrowers will make every effort to satisfy the recall on T+1 even if the recall is issued by the lender post 16:00 UK time on T+0 and not default the return to T+2”. This requirement, which must be completed by December 31, 2026, transforms recall automation from a competitive advantage into a regulatory necessity – precisely what Pirum’s Recalls Manager delivers.

Automation gaps result in higher costs

The AST’s Implementation Plan had stated, when first published in February, that only “5% of UK equity trades (bilaterally agreed & non-cleared) are submitted early and accurately enough to allow settlement on T+1”. Therefore, much work remains to ensure UK (and EU) firms do not, as the implementation deadline approaches, feel compelled to throw headcount at the problem.

Indeed, the AST plan also references a survey of North American industry participants post-T+1 implementation “shows a 16-18% uplift in staffing costs resulting predominantly from a lack of automation and process redesign.”

For firms choosing to hire rather than automate, the costs of additional staffing will be exacerbated by the higher risk and incidence of fails, penalties, and overdraft costs that arise from manual operations. In addition, firms face the risk of reputational damage, particularly as the AST will begin to publish settlement efficiency monitoring, starting January 2025.

Proven solutions for T+1 readiness

With these regulatory requirements becoming mandatory, firms need proven solutions that can deliver both compliance and operational excellence.

Pirum’s complete, connected lifecycle offering delivers a tried-and-tested, real-time (so even T+0 compliant) solution, with industry-leading STP rates (99.9%!) and standardised connectivity to the entire securities finance ecosystem.

If you have any questions about how automated recalls and returns can benefit your operations, get in touch.