The move to T+1 is officially on hold. The U.S. Securities Industry Association’s board of directors today unanimously approved a plan to drop the planned move to T+1, focusing on straight-through processing instead. The Canadian industry had been following the U.S. lead on this initiative.

“The overall goal of SIA’s earlier STP/T+1 program to convert from T+3 to T+1 settlement by 2005 has been replaced by a set of challenging, straight-through processing goals to be accomplished over the next two years,” said Allen Morgan, Jr., chairman of SIA’s board and chairman and CEO of Morgan Keegan & Co. in a news release.

“The industry needs to focus on more effective straight-through processing before it is in a position to fully evaluate a conversion from T+3 to T+1 settlement,” Morgan said. “We believe that the settlement period should be evaluated again in 2004.”

The STP program will build on SIA’s STP/T+1 program, which has been under way for the past three years. The new program will focus on STP in 2003 and 2004, rather than on shortening the settlement cycle to T+1 in 2005.

Key projects in the new program include: improved processing of institutional trades; electronic book entry to replace physical securities and payments; and, a range of other automation projects which address the processing of stock lending, syndicate underwriting, and other operations functions. “The work of hundreds of industry volunteers on the STP/T+1 program over the last three years has provided a solid platform and clear direction for industry STP priorities in 2003 and 2004,” said Marc Lackritz, SIA’s president. “The board’s decision to focus attention on STP reflects the industry’s continuing commitment to investing in new clearance and settlement technology.”