[ I N D E P T H | T + 1 ]
“ To be honest, I didn ' t want to go down in city history as the man who shut the UK off to Asia Pacific investors. That was not how I saw my legacy [ playing out ].”
ANDREW DOUGLAS, CHAIR OF THE UK’ S T + 1 TASKFORCE
already made the shift to T + 1. HKEX also recently confirmed that plans are in to be“ technically ready” to support a T + 1 settlement cycle by the end of 2025.
Rob Arnott, head of brokerage, APAC at Northern Trust tells The TRADE that from an Australasia point of view:“ For any AU / NZ clients currently doing processes early on T + 1 local time to cover US market close, [ it ] will be pretty much impossible to meet the UK / EU timelines which are two to three hours earlier, which further promotes the need for either a global footprint, or to outsource to firms who have one and can meet regional cutoffs.”
He adds:“ Preparedness is absolutely key, and as with markets that have transitioned there will need to be changes. However, the progression towards T + 1 is increasingly a well-trodden path.”
Emerging markets are also expected to follow suit in the subsequent years to come, however a staggered approach is anticipated.
“ We ' ll see regional differences. I don ' t envisage that all countries in APAC will transition to T + 1 within the same time frame,” says Samrai, who reminds that at the end of the day“ the ability to manage T + 1 settlement timelines is not‘ an APAC problem,’ but dependant on the
“ So much of Asian trading interacts with London and New York. The time zones create a lot of inefficiency in that some time zones are already putting up collateral a day early to receive collateral back‘ tomorrow’.”
JON FORD, HEAD OF FIXED INCOME BUSINESS DEVELOPMENT, PIRUM sophistication and investment in technology by clients across the board”.
“ The message that we are seeing from regulators globally is very consistent, which is that technology and automation are going to be key to manage the transition to T + 1.”
The inevitability of progress In the end, T + 1 is inevitable across the competitive world of investing; however, progress must be worked on. Through the consideration of key divergent points – differing approaches to operational challenges, cultural disparities, cost restraints, regulatory differences, currency discrepancies, or the all-important fragmentation aspect – Europe and APAC are set to reap the rewards of cooperation.
As Basu Choudhury, head of trade lifecycle strategy at OSTTRA explains, ultimately:“ As the EU and UK moves towards T + 1, Asia-based investment managers will need to implement alternative solutions for funding the purchase of stocks or identify alternative liquidity sources”.
And with this in mind,“ the devil will be in the detail,” affirms Samrai,“ it always is.”
Indeed, the cost of being out of alignment is high for both sides, but with decisions demonstrably having already been made with APAC in mind, it appears that the symbiotic relationship between Asia, the UK and the EU is being not just considered but protected. Ultimately, the collaborative approach to change, the want to understand the challenges faced on the other side of the trading screen, and the pursuit of holding doors – and subsequently the world – open looks seemingly set to prevail.
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