Early market data after the implementation of T+1 settlement in the US on May 28 suggests that asset managers did a good job of assessing their capacity to fund securities settlements with a related FX trade in a shorter timeframe.
According to Adrian Whelan, managing director and global head of market intelligence for investor services at BBH, most intraday processing delays in the first week of the new regime were resolved with minimal market impact.
Custodians changed their operating model to offer a wider window for executing FX, which meant that clients could take advantage of this to fund USD settlement activity on T+1
Reported trade failure rates remained under 2% on day one itself, and data from the Depository Trust and Clearing Corporation indicates that same-day affirmation rates were well above the prescribed 90% threshold.
“Custodians changed their operating model to offer a wider window for executing FX, which meant that clients – especially in Europe and Asia – could take advantage of this to fund USD settlement activity on T+1,” says Chris Rowland, head of custody, cash and depositary bank services at State Street.
“Some
