APAC firms not ready for T+2
29 September 2014 New York
Image: Shutterstock
Fifty-eight percent of firms in Asia Pacific are not prepared for the change in Europe to T+2 on 6 October, according to a study by Celent and Omgeo.
Out of the firms surveyed, approximately one in six have not started to implement the necessary processes and technology changes to operate in a T+2 environment.
The study also revealed that 19 percent of firms are not aware of the impending move to T+2.
The issue of preparedness is significant with 56 percent of firms citing penalties for non-compliance as a major risk, while 38 percent of firms are concerned about failed trades and increased operational costs.
Matthew Chan, head of Asia strategy at Omgeo, said: “In Asia Pacific, a shorter European settlement cycle will be particularly challenging due to operational complexities associated with time zone differences.”
“For firms with significant European trading activity, automating processes is critical to meeting the T+2 deadline. It is also important that firms match trades on local T+1, as the current T+3 buffer for managing mismatched trades will cease to exist within the new compressed cycle.”
Shortening the settlement cycle in Europe is partly driven by the upcoming implementation of the Central Securities Depositories Regulation (CSDR), in development since 2012 and adopted by the European Council in June 2014, and TARGET2-Securities.
Neil Katkov, author of the Celent whitepaper, said: "The move to a T+2 settlement cycle in Europe is an initiative of unprecedented scope which makes greater operational demands on firms.”
“Without careful preparation, firms may experience greater operational risks.”
“While many market participants are not yet fully ready, it is encouraging to see that over 80 percent of respondents are aware of the imminent changes and that firms are starting to think about and make the necessary preparations to comply with the deadline.”
Out of the firms surveyed, approximately one in six have not started to implement the necessary processes and technology changes to operate in a T+2 environment.
The study also revealed that 19 percent of firms are not aware of the impending move to T+2.
The issue of preparedness is significant with 56 percent of firms citing penalties for non-compliance as a major risk, while 38 percent of firms are concerned about failed trades and increased operational costs.
Matthew Chan, head of Asia strategy at Omgeo, said: “In Asia Pacific, a shorter European settlement cycle will be particularly challenging due to operational complexities associated with time zone differences.”
“For firms with significant European trading activity, automating processes is critical to meeting the T+2 deadline. It is also important that firms match trades on local T+1, as the current T+3 buffer for managing mismatched trades will cease to exist within the new compressed cycle.”
Shortening the settlement cycle in Europe is partly driven by the upcoming implementation of the Central Securities Depositories Regulation (CSDR), in development since 2012 and adopted by the European Council in June 2014, and TARGET2-Securities.
Neil Katkov, author of the Celent whitepaper, said: "The move to a T+2 settlement cycle in Europe is an initiative of unprecedented scope which makes greater operational demands on firms.”
“Without careful preparation, firms may experience greater operational risks.”
“While many market participants are not yet fully ready, it is encouraging to see that over 80 percent of respondents are aware of the imminent changes and that firms are starting to think about and make the necessary preparations to comply with the deadline.”
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