Nearly half of the firms surveyed by the Conference Board recently said they have experienced some level of backlash against their ESG-related initiatives.

Among those companies, those in the financial and insurance services industries have been affected the most, with 37% of that sector saying they have experienced some level of backlash over environmental, social and governance initiatives. The next highest was business and professional services, with 8% of respondents in that sector saying there had been some backlash.

A report on the survey results authored by Andrew Jones, senior researcher, ESG center, at the Conference Board, said most of the backlash has been centered primarily on the social and environmental components of ESG, with the backlash being particularly emotionally charged when companies take public stances on social issues.

When asked which social issues their companies have taken public stances on since the beginning of 2020, the top response was racial equality at 61% of respondents, followed by 44% that said LGBTQ+ rights, 40% vaccination and other issues related to the COVID-19 pandemic, and 39% gender equality. Multiple answers were accepted.

When asked what the leading sources of backlash are, 31% and 22% said state policymakers/candidates and federal policymakers/candidates, respectively, followed by their own employees at 20%, media at 17% and senior management at 12%.

When asked which sources they're most concerned about over the next two years, 55% each said state and federal policymakers/candidates. Multiple answers were accepted.

Despite the volume of backlash, when asked what the extent is of the backlash they've received, 47% said minimal, 28% said moderate, 9% said none and 4% said they didn't know. Only 12% said either significant or very significant.

The industry's T+1 testing program, designed for full end-to-end testing for clients, formally kicked-off on August 14, 2023. Scheduled to run for the next 9 months through May 31, 2024, the program uses 21 bi-weekly testing cycles so clients can test for T+1 settlement based on the changes made to their respective systems and processes. Participating infrastructures in the industry test include DTCC's subsidiaries ITP, NSCC and DTC, as well as exchanges Cboe and Nasdaq and the OCC.

“From the start of the T+1 initiative, robust and coordinated testing has been recognized as one of the critical success factors by the industry,” said Michele Hillery, DTCC General Manager of Equity Clearing and DTC Settlement Service. “This comprehensive and well-coordinated industry test that we're beginning today, which will continue for the next 9 months, will help firms assess their readiness and drive towards a successful industry implementation of T+1 on May 28, 2024.”

The industry test program includes opportunities for free-form testing as well as different scenarios for non-standard settlement, including production holiday processing, Corporate Actions (for example, stock splits and tender offers) and double-settlement days. Clients do not need to execute each scenario, nor are they limited to testing only the scenarios provided in the test plan. Rather, they should consider the various processes and systems impacted by the T+1 functional changes at their firms and determine their own scope of testing, with the scenarios as a guideline for each firm's unique circumstances. Firms can participate in as many testing cycles as they choose.

“The entire trade life cycle will be available for testing, including, but not limited to trade affirmation, confirmation, clearance, settlement, and trade exception flows,” said Hillery. “We recommend that firms test run through scenarios where there are breaks in the system to assess recoverability and resiliency. The message should be loud and clear for everyone: test and be ready.”

DTCC's T+1 Detailed Test Approach, as well as other supporting documentation, is provided on UST1.org to help firms plan, prepare and execute their T+1 testing.

DTCC also recently launched a new test environment to allow clients to test in both T+1 and T+2 environments concurrently. While T+1 testing for firms is not mandated by regulators or any other industry group, it is highly recommended.

More than three quarters of market participants expect accelerated settlements to have a major impact on their business, according to Citi's most recent 'Securities Services Evolution' whitepaper.

Additionally, 80 per cent of those polled expect that there will be a notable impact on their securities lending and borrowing businesses.

The whitepaper, which is the third in a series, reports that cash, funding and liquidity management are seen as the primary obstacles to achieving a shorter settlement cycle.

In order to prepare for the transition, Citi states that clients and counterparties are the initial priority for market participants. Following this, in-house platforms and processes and staffing and location strategies will be key focus points.

As part of their planning, 69 per cent of firms are centering automation and the standardisation of client communications. A similar figure (64 per cent) expect to upgrade or replace their technology platforms.

Outside of T+1, the paper also considers the future of distributed ledger technology (DLT) and digital assets initiatives. These were engaged with by almost a quarter of those polled, a significant increase from the report's 2022 findings where only 47 per cent were involved in the space.

Close to 90 per cent of those surveyed believe that digital money, such as CBDCs and stable coins, are a viable way to support securities settlement, up from the 72 per cent who held this opinion in last year's whitepaper.

More than 500 market participants took part in the study globally, with quantitative and qualitative data gathered from 12 financial market infrastructures and industry participants.

Commenting on the findings, Okan Pekin, global head of securities services at Citi, says: “Our research shows that the rapidly accelerating move to T+1 in major markets poses significant challenges to industry participants, leaving an urgent need to drive innovation, automation and efficiencies in global operating models.”

Matthew Bax, global head of custody for securities services at Citi, states: “As market infrastructures continue to evolve, it’s increasingly important for industry participants to work in partnership to strengthen the stability of the overall ecosystem. Supporting innovation while maximising global consistency of the client experience remains core to our securities services offering.”

Euroclear Bank, the Brussels based international central securities depository (ICSD), and the Korea Securities Depository (KSD) have partnered to open an omnibus account.

The domestic market has made advancements in making Korean Treasury Bonds (KTBs) Euroclearable. The Euroclearable link will allow international investors efficient, post trade access to KTBs.

The service launch is expected to contribute to providing offshore investors with the ease of market access and expanding the liquidity and utilisation of KTBs and MSBs.

Soonho Lee, chairman and CEO at KSD, says: "I am convinced that the omnibus account will serve as a cornerstone for advancing the globalisation of the Korean capital market by making KTBs more liquid and actively utilised. We will continue the great work and make the best efforts to ensure thorough system development which will commence in due course."

Peter Sneyers, CEO at Euroclear Bank comments: "We have been working together with the KSD, the ministry of economy and finance and the domestic regulators with a shared vision to provide a solution for international investors to access efficient and safe settlement of local Korean government bonds.

“Our link will also allow KTBs to be eligible on our tri-party platform. As a financial market infrastructure, we will continue to support and work with the market with a commitment to create an ecosystem for growth as we move closer to the launch of the Euroclearable link.”