Real issues in T+1 “are not in settlement”

VIDEO | One month after his introductory keynote on T+1 at PostTrade 360° Copenhagen 2023, Alan Cameron, Head of Client Line Advisory, Securities Services at BNP Paribas once again took to the stage at PostTrade 360° Helsinki 2023 to speak on the same topic. His verdict? There still remains more questions than answers, and the reasons for that have remained consistent – Europe’s market is fragmented and FX brings another layer of complexities.

This session was sponsored by BNP Paribas.

“It is true that we get very vexed about the failure rate in Europe, but we don’t really know what a good failure rate would be,” Alan Cameron said. In the adoption of T+1, the US has one clear advantage: its market is not as fragmented as Europe’s, where there are many different CSDs across the continent.

With FX, “there are many things you can do to make your market more attractive to foreign investment and I don’t think the shortening of settlement cycles is really one of them,” he said. “There wasn’t a great deal of consultation with foreign investors when America decided to go to T+1.” But again, the US could play to an advantage here. “They have the luxury of having the stocks that everybody wants,” Alan Cameron pointed out. “That’s not the case for every European market.”

To end, he concluded that the industry wants “a pragmatic and cautious approach” and that the real issues in implementing T+1 are not in settlement itself, but in trade booking allocation and matching.