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Which market will be the next T + 1 domino to fall ?
The global transition to T + 1 settlement is well underway , but this shift isn ' t a one-sizefits-all journey . Each market is moving at its own pace , facing unique challenges along the way . When the US completed its transition to T + 1 in May , the rest of the world took notice . It sparked inevitable discussions on roadmaps , timelines and co-ordination from Europe to Asia . Although the move was largely successful , representatives from other markets are as quick to point out jurisdictional differences as they are to pinpoint the successes . In Europe for example , the journey is uniquely complex because of the sheer number of systems and different infrastructure minutiaes involved . At the time of writing , EU regulators and the bloc ’ s taskforce seemed to have aligned on urgency and co-ordination with the rest of Europe , after being relatively silent on the matter for some time . In the UK , the market now has a clear plan in place with the aim of shifting by the end of 2027 , however key players need to step up and lead the charge . Switzerland has previously suggested it would try to align with both the UK and the EU where possible and will likely be fast to follow . Asia-Pacific is also
The US move to T + 1 sparked a global domino effect , with markets globally now evaluating their own transition timelines . While the US somewhat provided a blueprint , each decision is unique . This feature delves into the lessons learned and what the shift means for the UK , EU , Switzerland and APAC markets - those who could be next up . Sophia Thomson reports .
diving into discussions , with Australia at the fore . However , their transition depends on upgrading their existing systems first - a challenge that many other markets will likely face . In regard to Singapore , a recent BNP Paribas briefing note said the Monetary Authority of Singapore ( MAS ) had reached out to the Central Depository ( CDP ) to understand the views of custodians on the market adopting a T + 1 settlement cycle . BNP Paribas noted that post-trade participants are not keen to shorten the cycle due to the operational challenges , especially for international relationships . The industry has therefore requested that the MAS and the CDP take a cautious approach to T + 1 . So is there any benefit to ‘ going next ’ and who should be the market to step up next given concerns about settlement fragmentation and market competitiveness ?
Learning from the US transition The US transition to T + 1 in May was hailed as “ unbelievably successful ” by Citibank in its recent whitepaper – while one of its executives also referred to the transition being seen as a “ blueprint ” going forward – but it was the result of years of preparation , and not an overnight success . “ The US move to T + 1 worked well because there was just one time zone ( ET ) to consider . The challenge will be when Europe and the UK follow suit , as their time zones don ' t align ,” says Val Wotton , managing director and general manager at the DTCC . Another valuable takeaway , emphasised by Pardeep Cassells , head of client experience at AccessFintech , is how the UK T + 1 Settlement Taskforce is addressing areas that the US shift overlooked . " I really like what the Accelerated Settlement Taskforce are doing ,” Cassells notes . " They ' re chipping through facets of the peripheral impact that the US change refused to consider . And when I say US , I mean North America sweepingly , because it was the same for all the markets that moved . " The US didn ' t really focus on securities lending ; they didn ' t focus on FX at
34 Global Custodian Fall 2024