T+1 to increase cash drag and funding costs, investors warn

Faster settlement will create cash shortfalls for non-US asset managers

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The shift to T+1 settlement in the US next year is meant to save investment firms money. Asset managers outside the country are concerned that – for them – it may achieve the opposite.

When the US reduces its settlement window to a single business day after the trade date, or T+1, in May 2024, foreign funds could face potentially double the funding costs necessary to settle trades, buy-siders say. And funds will likely suffer a drag on returns as they are forced to increase cash buffers to

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