Many Asian firms oblivious to European T+2 settlement

Numerous firms in Asia Pacific are unready for the upcoming reduction in the settlement cycle in Europe.

The majority of firms in Asia Pacific are not ready for the upcoming reduction in the settlement cycle in Europe. 58% of firms in Asia Pacific have said they are not prepared for Europe’s shorter settlement. This is according to a survey commissioned by Omgeo and published by Celent.

However, the survey only received 31 responses and its organisers also pointed out that even though firms in multiple countries had been sent the survey, a disproportionate number of responses came from Japan.

Europe’s settlement cycle will change from T+3 to T+2 in early October. Nearly one fifth of the respondents in Asia said they were not aware of the upcoming changes, even though market participants in Asia-Pacific trading on European venues will be required to abide by the T+2 settlement cycle.

Approximately one in six firms has not yet started to implement the processes and technology changes to operate in the shorter timeframe.

Failed trades and increased operational costs were flagged as concerns by 38% of firms.  

While 80 – 90% of respondents intend to move to T+2 settlement, some firms in Asia-Pacific plan to stay on T+3 and rely on their brokers to fulfil the T+2 obligations on their behalf. Time zone differences with Europe also mean that Asia-Pacific will be on a tighter post-trade schedule than locations in Europe.