[ W E E K 2 ]
T + 1 War Rooms – Asia :
they can affirm that they didn ’ t notice any material deviations during a relatively calm market , it could offer additional reassurance .
To manage this , Van Dine observed that Asian clients typically have their funds prepared for FX conversions and onward settlements . While lacking direct investor contact , internal discussions indicate no reports of investors requiring additional credit or support due to funding challenges . Clients appear to manage their trading strategies effectively , potentially adjusting positions in other markets to fund their accounts , though specific actions aren ’ t fully visible .
He said : “ By the morning in Asia time , clients know their obligations for affirmation and settlement instructions . This means they have all day to ensure their accounts have sufficient cash for both the FX settlement and the ultimate settlement that starts happening in our evening .”
The custody product manager weighed in , saying : “ From a custodial perspective , any potential concerns typically revolve around significant client rebalancing , particularly across the markets with longer settlement cycles . Aside from occasional delays in US buy orders , we haven ’ t observed transparency in underlying client activities as a custodian .
“ We ’ ve heard brokers extending credit , which has been a useful solution . There ’ s increased emphasis on active cash management , especially for Japanese clients navigating unique trust bank structures . Overall , there ’ s heightened awareness and involvement in cash management processes , varying with firm size and capabilities ,” said another .
MANAGED AHEAD OF TIME One expert said : “ Looking after the markets business in Asia , I would say FX is generally managed ahead of time , with Japan being a slight exception due to its unique market structure . Most of our clients ’ trade in advance unless they have trading capabilities in the US time zone , allowing them to trade same-day FX . For those without such capabilities , prefunding is the norm .
They added : “ We also hear from clients that some brokers allow T + 2 settlement , effectively providing credit . In Japan , the unique structure of Japanese trust banks does not allow any window for same-day trades unless there is trading capability in the US time zone , so pre-funding is standard here as well . We haven ’ t seen anything extraordinary or different ; most managers are well-prepared .”
One custodian noted that in the mid-tolong term , they ’ ve noticed a few managers requesting automated FX solutions more frequently than before . Regarding affirmations , it ’ s worth mentioning that in Japan , affirmations are not used at all at this stage , which is unique to the Japanese market .
A NEW BAU PROCESS ? Following a period of war rooms , command centres and hyper care focus , Citi ’ s Van Dine described the evolution towards the firm ’ s new business as usual ( BAU ) standard : “ With the new BAU , we ’ ve added some additional resources to manage queries and pay particular attention to specific timeframes , whether in Asia or Europe . This setup will likely remain until we ’ re confident that the entire market has
normalised to this new process .”
The custodian noted that it hasn ’ t seen any increased concerns , with query levels remaining steady . Things are operating as expected now , with query levels consistent with what they saw before .
Van Dine added : “ Regarding the time needed to respond to all queries , we ’ re still seeing a normalisation , particularly with trade status updates . We ’ re ensuring that clients receive instructions and are highlighting self-service options . We did see a spike in queries during the first week , but it has since normalised to expected levels .”
Another firm mentioned that they placed significant focus on preparations leading up to the implementation date , and well into the second week , they ’ ve continued to allocate additional resources to handle inquiries and monitor ongoing developments , data , and statistics in the space . However , they haven ’ t seen any substantial fallout on their end yet .
They said : “ I think settlement inquiries should be more specific , client-based upon affirmations and why something may not be affirmed when they think it should be . We ’ re mainly focusing on that . General inquiries are still quite low for us .”
24 Global Custodian Week 2