THETRADETECHFX DAILY cover feature however , in April , just a month before the planned implementation date of T + 1 , the netting service announced that it was not planning to adapt its current system .
Following a 14-month consultation with its members , CLS had concluded that the development to accommodate a move in its initial pay-in schedule – with a deadline of 00.00 CET – would take “ considerable time to implement ” and was therefore unfeasible .
For some of the larger members , those system developments , and related approvals , could theoretically take between nine and 12 months to roll out .
Either way , in its internal survey , over 40 % of CLS settlement members – representing around 50 % of CLS Settlement ’ s $ 6.5 trillion average daily value ( ADV ) – declared that system development may be needed , the infrastructure provider said . CLS has 76 settlement members , as of December
2023 , with 60 of those based outside of the US , Canada or Mexico .
The decision was met with some degree of animosity from several angles with many suggesting the decision was down to a lack of foresight and planning . Several sources speaking to The TRADE suggested that if the service had concluded its assessment earlier then there would have been time for changes to be made . Others even hinted towards the decision as potentially fatal for the netting service , leaving a window open for a competitor system to stake its claim on a workflow that has historically been monopolised by CLS .
“ The issue is , not to speak ill of CLS , but they did say they were going to review their cut-off times , and at that point the market paused and there was no further development or change in process in anticipation of what that may have been ,” added Renouf .
“ When the news came out and there was a very slight change rather than what people wanted , there was then once again a mad panic for people to change their processes and think about how they settle .
“[...] CLS has been viewed as gold standard , but I spoke to a very large buy-side client ahead of today-who was the head of trading - and believes the market is wide open . We ’ re at the advent of blockchain , AI and fintech and they think there is room for a competitor to come up the ranks .”
With no other solution , buy-side firms subsequently began turning to custodians to see what they could do to adapt their own internal deadlines to accommodate the issue .
This unsurprisingly left a sour taste in many custodians ’ mouths who felt as though they had been scapegoated to manage an issue that was not their responsibility . It also opened the
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