[ I N D E P T H | S E T T L E M E N T ]
THE BIG SHORTENING :
The domino effect of the US move to T + 1
The US has got the world talking when it comes to shortening settlement cycles , but where do other geographical markets stand when it comes to T + 1 ? Jonathan Watkins explores where markets in Europe , Asia and Latin America stand with their own plans .
In the previous issue of Global Custodian we took a very high level view of the shift to T + 1 in the US equities market – assessing its impact on various aspects of the capital markets , from FX and securities lending to corporate actions and beyond . But as the timeline towards to May 2024 transition marches on , so must we . Our coverage in subsequent editions will shift much more towards the specific issues that various firms of all shapes and sizes will be facing in the home stretch , and thanks to our newly launched T + 1 Industry Issues Forum – in partnership with the ValueExchange – we are learning much more about the exact complexities that market participants are losing sleep over . In the first few weeks of launching the Issues Forum we had already gathered 60 queries which go beyond what traditional gets covered during an industry webinar or panel session . That is why our future features will be dedicated to those granular details and queries , digging deeper into operational issues , ETFs , securities lending , FX ( these made up the vast majority of the enquiries ) and more . But the aim of this feature is to address about a third of the questions which were around the moves the rest of the world is making - or planning to make - when it comes to settlement compression .
• “ Is Mexico moving to T + 1 and , if so , when ?”
• “ Are there other South / Central American countries moving to T + 1 ?”
• “ We know the UK and Europe considering a move – but when are they likely to ?”
The Americas In a reverse of what occurred in the mid-noughties , the US has taken the lead on shortening its settlement cycle among major markets ( previously Europe moved to T + 2 in 2014 and the US in 2017 ) in a relatively surprising timeline . Now the rest of the world has decisions to make . Canada will begrudgingly be moving on the same day as the US ( the northern neighbour would have preferred a September date where it also has Labor day as a public holiday ) while Mexico – as the question above asked – is exploring moving at the same time as the US and Canada , though no announcement has been made as of yet . Watch this space however , as Mexico actually moved back from T + 1 to T + 2 in 2017 to align with the US , and in an interview with Citi earlier this year , Roberto Gonzalez Barrera , chief executive officer , post trade division at Grupo Bolsa Mexicana de Valores , said : “ We have start-
14 Global Custodian Sibos Special 2023