London, 17 October 2012 – A new report from Aite Group assesses the various obstacles and challenges related to shortening trade settlement cycles in Europe, the United States, Asia, and the Middle East. It examines settlement cycles in these markets and highlights regulations surrounding them and plans to shorten them. Based on Aite Group interviews with 15 brokers and custodians, the European Central Securities Depositories Association, Euroclear, and Clearstream, the report also highlights the impact of settlement cycles on various operational processes.
Regulators have focused on the earlier stages of the trade lifecycle—trading and clearing—over the last couple of years, but settlement infrastructure and market practices around the settlement process are also on regulators’ radars. The publication of the Central Securities Depositories Regulation by the European Commission in March 2012 and the ongoing work of the European Central Bank to establish a new, pan-European settlement system in the form of Target2-Securities—T2S—by 2015 indicate the importance that European regulators have placed on settlement issues. Internationally, similar desires exist to shorten the settlement cycle.
“Firms will need to tackle several key areas ahead of a move to T+2 and monitor certain other areas very closely during the implementation period,” says Virginie O’Shea, analyst with Aite Group and author of this report. “Best practices are unlikely to be adopted by the majority of the market, given traditional underinvestment in this area, but should be viewed as practices to aspire to.”
This 40-page Impact Report contains 14 figures and five tables. Clients of Aite Group’s Institutional Securities & Investments service can download the report.