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ironed out . As Andrew Douglas , chair of the UK T + 1 Taskforce Technical Group , points out : “ Moving to T + 1 is about finding the right balance between being ready and ensuring we ’ re not rushing into a migration that carries significant risks .” This is of course crucial . A coordinated and deliberate approach is essential in order for it to work , ensuring that the market is prepared and not hurried into rushed or risky migrations . The UK ' s Accelerated Settlement Taskforce ( AST ) in September released a roadmap for T + 1 transition , outlining 43 key recommendations on settlement processes , static data , and corporate actions . The UK aims to migrate by Q4 2027 with a well-thought-out approach . Douglas explains , “ We ’ ve chosen our timeline carefully to ensure readiness while avoiding the significant risks of rushing this transition .” While the careful strategy outlines a guide to success for the UK , Sonal Meghani , FI segment and regional strategist , securities services , BNP Paribas highlights the other side of the coin : the potential misalignment with the EU , especially regarding exchange-traded funds ( ETFs ) and dual-listed securities .
“ The US didn ' t really focus on securities lending ; they didn ' t focus on FX at all and have left the current FX timeframe in situ .”
PARDEEP CASSELLS , HEAD OF CLIENT EXPERIENCE , ACCESSFINTECH
For the UK , there is a number of dual-listed securities with various jurisdictions , each with different asset servicing and tax rules . “ To capture any possible impacts like record date , ex-date impacts ( a late theme in the US ), all scenarios would need to be confirmed before the fact for UK move ,” says Meghani . “ Although the UK can leverage lessons learned from the US , the US and UK are very different markets , and a simple copy and paste will not suffice .” To ensure a smooth transition , the UK must consider the effects on all stakeholders . Meghani adds : “ Only by doing this , can the UK ensure a smooth and efficient transition that enhances market stability and operational effectiveness .”
What about Europe ? Europe ' s most obvious challenge lies in the fragmentation of its financial mar- kets , in stark contrast to the US which had a single CSD to facilitate the streamlined coordination . Unlike the US and UK , Europe ’ s financial landscape is highly fragmented , with over 20 currencies , 22 central securities depositories ( CSDs ), 18 central counterparties ( CCPs ), and numerous exchanges and regulatory bodies , making a unified waltz to T + 1 quite complex . Silvia Sancin , senior custody solutions manager at BNP Paribas , explains that no market in Europe is significantly more prepared than another , making regional coordination essential for a successful transition . The priority for Europe is not speed , but ensuring the transition is smooth and coordinated . " The number one priority for all the actors involved should be making the transition a success without rushing just because other countries have moved to a compressed cycle ," says Sancin .
36 Global Custodian Fall 2024