Europe’s Markets Warn of Dangers of Copying US T+1 Settlement
- EU is considering a reduction of securities settlement cycle
- Impact on FX, repo, cross-border activities are among concerns
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European markets face risks including an increase in failed trades and a loss of liquidity if the region follows the US in moving toward a faster settlement cycle, the investment community warned regulators.
Asset managers, banks and trade groups are worried that settling trades on a T+1 basis — half the time it currently takes — could potentially prove disruptive, according to a compilation of responses to the European Securities and Markets Authority published Thursday. The US is poised to make the shift in May and the Securities and Exchange Commission’s chair has urged Europe to consider following suit.