Both the UK and the EU have begun task forces to discuss the implications of moving to T+1 in their respective regions, with the UK scheduled to present its findings ahead of schedule. But before a move to T+1 can be considered, the region’s efficiency issues need to be addressed.
相关:什么?.S. T+1 means for firms across Asia and Europe
存的马特·约翰逊报道, 导演, ITP Industry Relations and Strategic Initiatives, 和简·考夫兰, 导演, vnsr威尼斯城官网登入管理, joined a panel of 帖子-trade experts that included Emma Johnson, 执行董事, Securities 服务 Global Custody Industry Development, J.P. 摩根, 萨钦Mohindra, 执行董事, 全球银行及市场, 高盛(Goldman Sachs), 彼得·汤姆林森, 导演, 邮政贸易和邮政服务, AFME, 还有罗洛·伯吉斯, 导演, 咨询-资本市场, Deloitte to discuss advancing settlement in the EU and the UK.
Please read below for highlights from the panel:
The Importance of 结算 Efficiency
结算 efficiency is a priority in the EU but moving to T+1 will take more work to achieve than in the U.S. given the complexity and fragmentation of the European markets. As policymakers look into a shorter settlement cycle, the benefits include both investing and modernizing the technology behind securities infrastructure, improving efficiency and reducing costs. What’s more, the current interest rate environment is only adding to industry cost pressures. Reducing trade fails provides market participants with a financial incentive to address these challenges.
结算 efficiency is a central topic of discussion in European markets with the recent implementation of the CSDR settlement discipline regime. Cash penalties are being imposed to improve efficiency, while the hotly contested mandatory buy-in remains off the table — for now. In the almost two years since the settlement discipline regime began, fail rates for equities have dropped but not as much as anticipated, while fixed income fail rates have actually increased.
解决方案 to Increase 结算 Efficiency and Reduce 结算 Fails
The lack of standards in the settlement process, particularly among manual clients, 是否增加了错误和风险. Standardization is needed to improve efficiency and SSIs play a decisive role in trade lifecycle and efficiency. European market structures are inherently complex, as settlement can occur in several CSDs and across borders and jurisdictions.
Related: 存 CEO discusses the dynamics of accelerating settlement
监管即创新
Are regulatory mandates needed in order to move to accelerated settlement? To prepare for the move in the U.S., the Securities and Exchange Commission (SEC) is requiring allocation, confirmation and affirmation to occur on T0. Panelists agreed that a partnership between regulators and market participants would help to get everyone on the same page.
The industry continues to look for an environment that optimizes the facilitation of settlements to find common ground and can help the EU find a place of better settlement efficiency.
Preparing for Accelerated 结算 in the UK and EU
Trade group AFME and consulting group Deloitte have been working with numerous industry participants, 包括美国存, to compile information from the industry to connect the dots across the 帖子-trade lifecycle.
Hinting at some of their findings, panelists discussed that markets have a significant opportunity to improve settlement efficiency and one of the key drivers is standing settlement instructions, 或SSIs. A reduction in manual processing is critical to any move to accelerated settlement. However, the ability to automate is challenging, given many firms still communicate SSIs manually. 警报 is the gold standard of SSIs, providing much-needed standardization.
推动行业向前发展, 存 is increasing its Global Custodian (GC) footprint by not only adding custodians but also partnering with existing GCs to extend SSI coverage.