Settlement risk
T+1: complacency before the storm?
This paper, created by WatersTechnology in association with Gresham Technologies, outlines what the move to T+1 (next-day settlement) of broker/dealer-executed trades in the US and Canadian markets means for buy-side and sell-side firms
Can CCPs provide a port in a storm for securities lending?
Basel III, T+1 and EquiLend scandal all incentivise clearing, but also disintermediation
Could intraday FX swaps help reduce settlement risk?
New swap platform hopes to ease funding pains, but can it promote more use of PvP?
On-chain FX’s brave new world excites some, worries others
Trading tokenised versions of currencies on blockchain could slash settlement risk but sceptics raise concerns over liquidity and pricing
Buy-siders to face rising settlement risks when 2 becomes 1
Non-US asset managers may miss crucial window to settle trades with CLS after switch from T+2 to T+1
GFXC fosters global awareness of T+1 impact on FX
Risk Live: Many non-US firms yet to realise FX implications of the country’s shift to shorter settlement times
T+1 to increase cash drag and funding costs, investors warn
Faster settlement will create cash shortfalls for non-US asset managers
MUFG’s settlement risk surges fourteenfold
Risk-weighted assets for Japanese lender’s unsettled transactions cross ¥300 billion mark in the first three months of 2023
Token effort is no blockchain boon for illiquid assets
Cash-like tokenised instruments find takers; initiatives based on less liquid assets struggle to take off
Stemming the tide of rising FX settlement risk
As the trading of emerging markets currencies gathers pace and broader uncertainty sweeps across financial markets, CLS is exploring alternative services designed to mitigate settlement risk for the FX market
Tales from the crypto prompt calls for FX-style market structures
Demands for interdealers and prime brokers to be brought into crypto market in wake of FTX debacle
RBC’s settlement risk charges blow up 260%
C$3.5 billion RWA figure marks one of the heftiest capitalisation of held-up trades ever by a bank
Dealers eye benefits of ‘on-chain’ FX
Automated market-makers are already used for EUR/USD trades – now can they tackle settlement risk?
NSCC and OCC to enhance co-operation on large cash calls
New deal would improve management of options expiries, but will stop short of cross-margining
Basel crypto capital plan threatens banks’ DLT projects
Proposed infrastructure add-on could make blockchain settlement and payment systems non-viable
The customer settlement risk externality at US securities central counterparties
This paper highlights an externality in the clearing of customer securities trades, and it examines the potential benefits and costs of alternative clearing approaches.
No soft landings in flight to safety from Russia
Impact of Ukraine invasion hit bank balance sheets hard; its effects look set to continue
UBS settlement risk up 238% as sanctions snag Russia trades
Held-up and failed counterparty transactions add almost $1bn to RWAs
Stablecoins’ would-be lawgivers don’t know what they’re missing
Bills in US Congress focus on run risk, but more detail needed on operational challenges
Wrong-way add-on helped LCH mop up VTB default
Margin supplement bought precious time to formulate wind-down strategy
New GFXC chair aims to keep up reform on last look
SNB’s Andrea Maechler urges more liquidity providers and trading venues to address hold times
Regulators moot public utility to tackle FX settlement risk
Idea floated as battery of initiatives vie to address slowing use of PvP services
Monitoring intraday liquidity risks in a real-time gross settlement system
This paper proposes an intraday liquidity risk indicator (LRI) for each participant in a real-time gross settlement system (RTGS).
Dealers back CLS plans for EM settlement system
12 banks announce support for project to extend PvP protection to certain CLS-ineligible currencies