T+1: A problem for Asia
On May 27th 2024, Canada will be the first North American market to move to trade-date-plus-one (T+1) settlement cycles for Canadian securities. On May 28th the USA will follow (as will Mexico – TBC).
Under current market guidelines, this means that global investors will be required to “affirm” (effectively pre-match) all of their US trades by 21:00 ET on T+0, trigger all of their recalls on US securities by 23:59 on T+0, and then settle all of their Canadian trades by 03:59 on T+1. All trades in North America will then settle on T+1.
These shifts will have a profound impact on investors and their service providers around the world – most of all in Asia. Faced with time differences of up to 14 hours, Asian investors today
will have no choice but to complete all of their processing for North American trades on trade-date – so that all trades are fully funded, matched and ready to settle before the end of the Asian trading day.
This acceleration of processing will have impacts across the entire front-, middle- and back-office operations of Asian investors – and will demand significant preparation and change over the coming months.
In October 2023, the ValueExchange and Broadridge led a round-table discussion of leading experts from the Asian securities and investments industry – to seek and share views on the impact of the T+1 transition to them.
The impact of North America’s move to T+1 will be more strongly felt in Asia than anywhere else on earth – and its specific impacts vary depending on location and investment strategies.
From those who see it as a logical evolution of the financial markets, to those who consider it to be an opportunity for greater outsourcing and partnership, views on T+1 in Asia are significantly varied.
Above all else, the common theme in Asia-Pacific is readiness.
With only a few months to go until the transition to T+1, only 25% of Asian investors are even preparing for T+1 – with little signs of growing activity to come.
So what does T+1 mean to us in Asia and what can we be doing to prepare?
T+1 in Asia: today's reactions