What Does SEC T+1 Rule Mean for IT Teams in Financial Services?

The financial services industry is no stranger to change, and the SEC T+1 rule is no exception. Effective from May 28, 2024, the new regulation will reduce the settlement time for U.S. securities transactions from two business days to just one.

In this blog, we delve into the SEC T+1 rule, explore how Riverbed’s Network Observability solutions can help IT network teams in meeting the associated challenges, and provide guidance for current Riverbed customers to prepare for the SEC T+1 changes.

A quick summary of the SEC T+1 rule

SEC T+1 is a rule amendment that will shorten the settlement cycle for broker-dealer transactions in securities from two business days after the trade date to one. The SEC believes this will benefit investors and reduce risk in securities transactions.

There are other nuances of this rule amendment that address processes and record keeping requirements but for the network teams at financial services institutions, cutting the allotted time to settle a transaction in half will have the most impact.

Challenges for IT network teams

The new T+1 rule puts a lot of additional pressure on IT and network teams at financial services organizations to ensure their networks can handle the increased network demands and data processing that will come along with the shortened transaction processing window.

This means it’s critical that financial services organizations have broad and deep visibility into their network so they can proactively identify and quickly resolve network performance issues. This visibility is also crucial for adhering to T+1 requirements, answering questions like “how much traffic is being consumed?” and “how is traffic being prioritized?”

Riverbed NetProfiler and AppResponse can help address those challenges. Riverbed NetProfiler provides network flow analytics that can quickly diagnose network issues before they impact performance. Meanwhile, Riverbed AppResponse offers the robust network and application analytics needed to shorten the mean time to repair network issues.

NetProfiler and AppResponse customers

For existing Riverbed customers using Riverbed NetProfiler and AppResponse, it’s important to note that adapting to new SEC T+1 rule may lead to increased data generation and has the potential to stretch the limits of your NetProfiler and AppResponse capacity. To ensure your network observability and data retention, now is a good time to double check your existing licensed capacity and system storage.

Determining if NetProfiler is oversubscribed

You can determine your flow status by going to the NetProfiler or Flow Gateway ADMINISTRATION > System Information link at the top of the screen, and then clicking on SYSTEM. The video below provides an overview and you can read this blog, Determining If NetProfiler Is Oversubscribed, for more detail.

Checking AppResponse capacity

To understand how much additional packet and analysis horsepower remains in your appliance, head over to Administration > Traffic Diagnostics from the appliance webUI. This built-in insight is packed with critical charts of hardware and software components that power the packet capture and analysis capabilities. On the “General” tab, the bottom four charts will indicate if you have reached your AppResponse.

If you are seeing packet drops in any of these charts you should investigate how much traffic is being fed to the appliance by visiting “ADMINISTRATION” > “Capture Jobs/Interface” page. This page will list all the network capture hardware cards (or software/virtual interfaces) that are installed on the appliance along with their rated link speed.

Once you are familiar with all the capture cards installed and their link speeds, head back to the “Traffic Diagnostics” insight where the top two charts titled “Throughput” and “Packet Rate” will show how much traffic is going through the installed interfaces. Each interface must only be fed traffic below its line rate at all times. If in these charts (which go back seven days) show spikes in traffic which surpass the line rate for an interface, work with the infrastructure feeding traffic to AppResponse and ensure it spreads the load of packets across the other interfaces. In some cases, you may need to add another AppResponse to handle the peak rate of traffic.

The video below provides an overview of the process for both NetProfiler and AppResponse customers in detail:

While the SEC T+1 rule amendment will benefit investors and reduce risk in securities transactions, it comes with some challenges for network IT teams at financial services organizations. Network Observability solutions can help provide these teams with the in-depth network visibility needed to address these challenges by providing proactive identification of network performance issues and faster mean time to resolution. It’s critical that existing Riverbed customers evaluate their current usage levels to ensure they are prepared to handle the increased network demands from SEC T+1.

Learn more about how Riverbed can help financial services organizations.