T+2 is Here, but Don't Hold Your Breath for T+0
Talk of shortening the settlement cycle further is premature and ignores the upheaval it would cause.
Anyway, the term has been ringing around my head over the past few weeks as I’ve edited our US reporter Emilia David’s piece on shortening the settlement cycle to T+2 in the US. When I was last at Waters, covering the sell side from London, I also covered the European move to T+2, although not with as much aplomb as Miya did in her feature.
We’ll be following up her feature with a number of spin-off pieces, and a look at how everything goes next week after September 5, when T+2 becomes the new standard in US markets for settlement. What I’ve found interesting is how much the discussion in the US has echoed that in Europe, in terms of already talking about shortening the cycle further.
It’s unclear, however, who exactly wants a T+1, or even a T+0, semi-real-time environment. For the buy side, certainly, it would put something of a crimp in the securities lending market, and undoubtedly have knock-on effects in areas such as repo, or short-term derivatives contracts.
For the sell side, I can see the benefits to an extent, but again from people I speak to, it seems there’s little appetite at present, mostly because it will involve a wholesale revamp of systems and technology processes to accommodate. The move to T+2, by contrast, has been a relatively simple one in terms of technological lift.
It would, of course, also be an enormous headache and strain for the middle and back offices, which are already stretched given the emphasis on compliance and risk in recent years, and the stringent regulations placed around areas such as settlement finality and trade reporting by regulators.
Is it likely to happen, though? Probably. Eventually. Just like 50 years from now, when everything is traded electronically, people will find the idea of the debates we have around electronification quaint and backwards. But not for some time yet.
Until then, well done to the US. You got there in the end, guys.
This week on Buy-Side Technology:
- My colleague Anthony Malakian and I covered cybersecurity in-depth this week, with a story on the New York state regulator’s new rules for financial firms, and a segment of the podcast dedicated to exploring the story beyond what we printed on the screen.
- After threatening to write about the Investment Book of Record again, I finally got around to it late last week. Here’s the piece.
- Awards! Awards everywhere! This time it’s an extension to the Buy-Side Technology Awards by one week, and an announcement that entries for this year’s American Financial Technology Awards will open on Monday, September 4. Which is Labor Day here in the US, so get your colleagues in London to start those entries, as punishment for their day off last week.
- I don’t know much about Malaysia, but luckily I have a talented Asia-Pacific reporter who does. Wei-Shen covers off how restrictions on the ringgit and other areas are pushing Malaysian money into analytics.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
The IMD Wrap: Talk about ‘live’ data, NAFIS 2024 is here
This year’s North American Financial Information Summit takes place this week, with an expanded agenda. Max highlights some of the must-attend sessions and new topics. But first, a history lesson...
MarketAxess builds strategy around X-Pro
MarketAxess profits were down in Q1, but revenues were up and automation volume hit a record $94 billion.
Canada’s triparty repo launch aims to fill C$60bn void
Test trades on TMX/Clearstream platform represent “quantum leap” for creaking funding markets.
People Moves: NorQuant, Tradition, Duco, HKEx, SimCorp, Hazeltree, Xceptor, Broadridge, and more
A look at the past month’s people moves in the capital markets technology and data space.
Bank-led consortium takes aim at position reporting
Five banks, including Barclays, BNP Paribas, Goldman Sachs and HSBC, have joined forces to mitigate interpretation and implementation errors in position reporting disclosures.
This Week: BBH, AllianceBernstein add data solutions, Deutsche Börse-Nodal Exchange, and more
A summary of some of the latest financial technology news.
Consortium backs BGC’s effort to challenge CME
Banks and market makers—including BofA, Citi, Goldman, Jump and Tower—will have a 26% stake in FMX.
Symphony boosts Cloud9 voice offerings with AI
The messaging and collaboration platform builds on Cloud9’s capabilities as it embraces the AI wave in what CEO Brad Levy calls “incremental” steps.
Most read
- Waters Wavelength Podcast: S&P’s CTO on AI, data, and the future of datacenters
- Chris Edmonds takes the reins at ICE Fixed Income and Data Services
- Waters Wrap: GenAI and rising tides