Jim Norcott: Steve, Rich, thanks for joining me here today. Really excited to talk about global markets, the products and services that we have available to our clients, especially leading up to T+1. Steve, maybe I'll start with you. You've had some conversations with clients in recent times. Certainly looking forward to everything that's coming down the pike for T+1. Can you share a little bit with us about what you chatted with clients in regards to implementations?

Steve Fenty: Sure. I'll start with the good news. We've done this before. This isn't the first time we've seen a change in settlement cycle. And, you know, over time it tends to reduce risk, create innovation and advancement. So we're in a good place. In the near term the market has to find its equilibrium and those are the conversations we've been having. We're a currency manager. We help clients with security settlement. We help clients with investor flow related transactions. And we help clients with hedging. All of these things result in some reason for change. The first is for securities funding. So when clients are buying and selling US securities in particular, they now have to consider a shortened settlement cycle. And what that means is probably more trade date activity. And this has different implications for different managers. We have managers who primarily have operations in Asia now have to think about transacting in US. And a lot of transactions that might have occurred on T+1 will now occur on trade date. So what that means now for US equities which tend to trade the most volumes at the close, is a very short period of time where trading can occur. And so for some managers that might mean pre-funding. For some managers that might mean trading on T+1 and foregoing CLS settlement so there's a number of implications that are being discussed for trading for fund flows. You know now we have inflows and outflows to funds where particularly for global funds, if there's a basket of securities, you may have a large portion of US equities, but also markets that trade T+2 and this might interact with the fund flow cycle. So cash management becomes more of a challenge and more of a concern. Also as a currency hedge manager we're rolling forwards for hedging purposes. They're settling monthly quarterly. And the same thing is true. So we have this settlement of PNL that needs to be reinvested, divested from funds. And a basket approach just increases the need for very tight cash management.

Jim Norcott: Great. Thanks for sharing that, Steve. Rich, what are you seeing?

Rich Sutherland: So, in the agency lending space, right. What we're really doing is lending on behalf of the asset managers. And in that capacity, we're not necessarily interacting with them. And their activities shouldn't be impaired at all by what happens in the securities lending world. Where we do see a change is going to be in the timing cycle. So if you think about securities lending in its current state, the majority of that business is all managed on an overnight batch process. So there's a there's an inherent time delay built into it. In this new framework we're really going to get into more real time, right? So what that means is if these asset managers put their as soon as they put their trade flow into the system, we're going to have an instantaneous view into it. So there's been, you know, technological advancements internal to State Street as well as new partnerships with third party vendors that are going to allow more of a reactive process to the securities lending marketplace and getting recalls out in near real time. And so what is that at the end state is it really gets to the core tenants of this, you know, enhanced settlement cycle and putting more efficiency in the market, less cell fails in the market and really more overall, you know, liquidity in the market.

Jim Norcott: Great. Thanks. Rich. Certainly seems like there's some big changes forthcoming with this. And you know, I wonder sometimes our clients ready, right? Markets are constantly evolving. There's regulation. And you know things like T+1 that are changing the market dynamics. So what can you know Steve, maybe tell us a bit about what clients should be doing to prepare.

Steve Fenty: Yeah, getting ready in preparation means a lot of conversations and that's the phase we're in now. I like to think that every manager, large or small, will have some change that they need to make as a result of T+1, and that will differ by manager. So if you have concentrated operations in Asia, that means one thing. If you have a global team and outsource certain activities, that means another. So preparation is really driven by looking at all your workflows across your transaction types, looking at the ways you can evolve your process, engaging technology partners, etc. We might see an increased desire to outsource to a manager like ourselves where we have global operations, but that might not be for everyone. So it's really an open ended conversation that continues to evolve.

Jim Norcott: What are you seeing in the security lending?

Rich Sutherland: Yeah, look, I think, you know, from a securities lending standpoint, you know, one of the biggest things that these asset owners can do is continue to partner with, you know, our different business partners at State Street and understand what they're doing, whether it be custody services or Steve's team, right? All of those are going to go into their investment decisions and getting us the information we need in the securities lending world. I think, you know, the reality of it is, is that, you know, change is good, evolution is good. It's going to put, you know, you know, more liquidity into the market and it's led to some interesting technological advancements, like I said, both internally with how we're thinking about things. But it's also created opportunity for new partnerships with, you know, external vendors that are providing these post-trade services and to, you know, to reiterate what Steve said, we've done this before, right? We went from T3 to T2, and now we're shorten it to T1. And from a securities lending standpoint, the market and the participants in the market are quite resilient because of the importance in securities lending to the financial ecosystem as a whole.

Jim Norcott: Great. Thanks very much. Certainly seems like we're very well positioned in the global markets arena to have these conversations with clients. As you know, as we get closer and closer to T+1, and certainly as other market advancements happen. So thank you both for taking sometime today. We really appreciate it and hopefully have another update in not too distant future.

Steve Fenty: Thank you

Brent Blake: Good morning, Jim and Steve. Nice having you here today. As you know, the SEC recently announced earlier this year that the US market will be moving to a T+1 settlement cycle from the existing two day T+2 cycle and that's going to be a significant change for the entire industry and our clients. Jim, one of the things that I'd like to start with you.

Jim Strachan: Yeah, sure.

Brent Blake: What are the key changes you see for our clients as we move to T+1?

Jim Strachan: Yeah. So thanks, Brent. Really, what I see going forward with challenges is really a tighter settlement window. So clients should really pay attention to the new timeframes that settlement timeframes that have been announced by DTC and also ourselves. The cut off times will get shorter, effectively eliminating one day in the settlement cycle. Secondly, clients should also pay attention to the new affirmation allocation deadlines, which were previously announced by DTC as 9 p.m. and 7 p.m., respectively. And so with that, you know, clients will need to pay attention to those deadlines and how they're what time they're submitting their trade instructions to us.

Brent Blake: That's going to be important.

Jim Strachan: Yeah. And then on top of that, we're also recommending that clients consult their legal and compliance areas with regards to how these new regulations that the SEC announce will apply to them across their organization.

Brent Blake: Yeah, that seems like it'd be important. Is it? It'd be different for each organization potentially.

Jim Strachan: Absolutely. And there's, you know, there's reporting requirements that come in line with that for each investment manager. And then in addition, we are recommending that clients consult with their broker dealers that that they're using. The reason for that is that broker dealers will have a commitment that they need to suffice to or comply with in the new SEC rules.

Brent Blake: Steve, one of the things Jim mentioned is the tighter timeframes. How is that going to impact our clients, and what can State Street do to help them meet those challenges?

Steven Iannelli: Yeah. Good question. Brian and Jim touched on this a little bit too. So in this shortened T+1 settlement cycle, the affirmation deadline is changing to 9 p.m. on trade date. So there's really not much time at this point to help our clients kind of prepare for these changes. We've outlined three affirmation models that we support today and will continue to support into the T+1 cycle. Those first two models really center around where our clients use a DTC trade suite ID, and that will allow our clients to affirm directly with their counterparties and then transmit their instructions to State Street by the 8:45 p.m. cutoff. They could also transmit their trades directly to State Street and delegate State Street to affirm on their behalf. And that scenario. The deadline is 8:30 p.m. on trade date.

Brent Blake: And as you mentioned, those are two models that we currently support. And we're very.

Steven Iannelli: Absolutely they're going to work today. And we think they're going to work tomorrow for our clients. Yep. And in the third option really is our clients that do not use this DTC trade suite ID in that scenario, the affirmation deadline really isn't applicable. However, we'll continue to accept instructions in post to the market. And also, as Jim mentioned this earlier too, we are encouraging our clients to seek guidance from the legal counsels on how these new regulations apply directly to them. So that's really what we've kind of been doing and suggesting to our clients at this point.

Brent Blake: Good, great advice guys. You know, it's interesting. It seemed like T+1 was so far in the future just a little while ago. And now it seems like it's moving very, very quickly.

Jim Strachan: Yeah. No doubt.

Brent Blake: You know, it sounds though like from what you're saying that there are challenges, but we are facing them up front and we as an industry seem to be on a path to success.

Steven Iannelli: Absolutely. And I just wanted to throw this in there too. So we are doing a little bit extra with our clients as well. So one thing we've been doing too is producing and distributing metrics around the affirmation rates, which really has been neglected in the past. So this will help kind of call attention to problem areas for our clients, which is great. You know, we've been engaging via direct client conversations as well as hosting office hours to really help our clients be successful in these changes going forward, too.

Brent Blake: Absolutely. Well, thanks guys. That was really good information and I appreciate the two of you being here today.

Jim Strachan: Yeah. Thanks, Brent.

Steven Iannelli: Thanks for having us. Yeah. Thanks.

Jim Strachan: Brent, Steve, thanks for joining me here today. What we what we're looking to discuss today is the impacts and challenges that clients in the Asia region are going to encounter when we convert to T+1 in 2024. So Brent, I'll start with you right now. What do you see will be some of the challenges for the clients in Asia who are trading in typically the US market right now?

Brent Blake: Yeah, Jim, you know, in my mind moving to T+1 is going to be challenging in and of itself is going to be challenging as it is. But I think for our APAC client base, they have some, you know, unique challenges that they're going to face primarily because of the time zone differences and everything.

Jim Strachan: Makes sense.

Brent Blake: You know, one thing is, you know, the tighter time frames themselves, you know, and the time zone differences, you know, our clients are going to need to look at what they need to do to meet that trade date affirmation deadline that's been given to the market by the SEC and DTCC. So they're going to have to look operationally. What changes do they need to make in order to meet those tighter time frames? And that's going to be challenging. Another thing I believe is going to be funding. You know, they're going to have to look at what's required to ensure that they have funding in place for settlement date in the US market. And again, all challenges that are brought more in scope because of the time zone differences. And lastly, even is just things like, you know, holidays, for example, where there may be APAC holidays that go against the US market being open, you know, how are they going to meet those challenges? Do they need to look at resourcing on holidays in order to process trades successfully in the US market? So all of those are unique challenges I think our clients are going to have to really look at their models and determine what changes they may need to make to be successful with the T+1 move.

Jim Strachan: Yeah, that makes sense and thanks for highlighting those. I'll switch over to you, Steve. What do you think might be some more challenges or difficulties clients in Asia would be encountering going forward?

Steven Iannelli: One area we've run into uncertainty around is how the affirmation process works in the US market, and how that really impacts our APAC clients, right? Historically, the affirmations have taken a back seat to market settlement. However, going forward, they're going to be brought to the forefront of the trade lifecycle and facilitate a more straight through settlement process. And really, we've been engaging with our clients via direct conversations, hosting office hours, preparing materials, all to help kind of bring forth those new requirements, understand the models that the clients are using today and what State Street can offer. So we're really just being communicative as we can with our clients in that region. I think one other big point to make is, is timing is going to present a challenge, obviously. We're prepared to still conduct settlement outside of the broker dealer affirmation process. So that really shouldn't be a problem, you know, impacting with the actual settlement in the market. But we do strongly urge our clients to consult with their internal legal teams just to really understand how these new rules and regulations are going to impact them.

Jim Strachan: Right, right. Well, thanks for highlighting those. You know, I really appreciate you guys bringing the highlights out, the challenges that clients from Asia may encounter going forward with the T+1 accelerated settlement cycle.