At Sibos Beijing, securities services discussions addressed China’s capital market reforms, standardization/interoperability, the role of DLT and tokenization in improving fund operation efficiencies, changing investor demographics, and market infrastructure resilience, flow’s Clarissa Dann reports.
Two panels, ‘Post-Trade in Harmony: Traditional wisdom meets Innovative Thinking’ and ‘Hype or hope? T+1 reality check’ focused on the relative ease of the North America transition to T+1. Panelists agreed that ‘it would be easier if more markets moved to T+1’ and that ‘time zones are a challenge’. While consensus was that most markets would make the move, delegates were reminded of how the process of consultation and preparation takes huge planning and engagement, when Karen Webb, Head of Issuer Services, Securities and Payments (ASX Operations Pty Ltd) and Mimi Yan, co-lead of the Operational Issues WG of the UK T+1 Technical Taskforce and Post-Trade lead, Financial Markets Standards Board gave progress updates on Australia/New Zealand and the UK respectively.
Yan reflected on the “thousands of hours contributed by members of the markets” involved as the T+1 Technical Group (TGT) of the UK Accelerated Settlement Task Force (AST)11 prepared draft recommendations for implementing the agreed transition to T+1 (bringing equity settlement in line with that of gilts, by a date to be communicated, and by end of 2027), split across key focus areas for participants, including the importance of automation and adherence to market practices. With the consultation now closed, the final report is expected around the end of 2024. These are just two of the ongoing consultations – the European Securities and Markets Authority (ESMA) has been consulting on shortening the settlement cycle for more than a year.12
Given that more investors are young, with expectations that buying securities is like a car purchase, according to Deutsche Bank’s Rengarajan, settlement needs to accelerate. “Younger retail investors are asking, ‘why is that they can order a car, which has thousands of components, and get it delivered on the next day, but it takes two days in many markets to receive a stock after making a payment,” he said.
Other topics covered included China markets, interoperable standards, tokenization, and market resilience.