What is same-day affirmation?
Same-day affirmation, also commonly known as SDA or T0, is a term used in trading to describe when the full trade verification process is completed on the same day that the trade took place, thus completing a large part of the trading process within a single day.
Where have you heard about same-day affirmation?
Same-day affirmation is used in a number of markets across the world, and if you’ve traded stocks then there is a chance you’ve encountered the process. Countries including India, Taiwan, Hong Kong, Japan, Singapore and Korea have a same-day affirmation rate of 90%, while Brazil, Italy, South Africa and the United State have SDA scores of less than 70%.
What you need to know about same-day affirmation.
Trade verification is used to make sure that all parties are happy with the essential details of a trade, and it is usually carried out in a partnership between the investment manager and the broker/dealer. There are four important steps in the verification process:
- Notice of execution by the broker/dealer
- Transmission of allocation details by the investment manager
- Confirmation of those details by the broker/dealer
- Affirmation by the investment manager
Once the affirmation has been completed the trade is marked as verified, allowing the clearing and settlement process to begin. Same-day affirmation is critical in enabling shortened settlement cycles.