With the US transitioning from a T+2 settlement cycle to T+1 in 2024, Haag says European clients increasingly want direct access into the US market. “By having a local market presence in the US, ICSDs such as SIX will be able to support customers seamlessly with their T+1 requirements. This means SIX can provide clients with US time-zone coverage and operational support. It is very possible we could see the US adopt T+0 in due course, so this just reinforces the importance of having a US presence,” says Haag.
At the same time, he continues that the establishment of a local presence in the US will enable SIX to carry out extensive market advocacy work, especially as it relates to ongoing T+1 developments. “The decision to establish a presence in the US – and more recently in Singapore – was entirely client led. Our Swiss and European clients, for instance, expect us to be as close to the US market as possible, so that we can provide them with local market intelligence, and undertake advocacy work on their behalf,” he says.
Conversely, SIX’s presence in the US is an excellent opportunity for the company to support North American clients in Europe with any alterations to its settlement system. Having moved fairly recently to T+2 and introduced the Central Securities Depositories Regulation (CSDR), appetite for settlement compression in the EU is fairly muted right now, but changes cannot be ruled out.
“Any implementation of T+1 in Europe will be far more cumbersome than in the US, as there are multiple CSDs and currencies in these markets, and a more complicated regulatory environment,” comments Haag. Again, this cements the importance of having a strong footprint in Europe to support the needs of US clients, should T+1 be pursued.
With trade settlement cycles undergoing significant changes, it is vital that clients engage with service providers who have a physical presence in the countries where reforms are taking place, as this can help support them with both their operations and market advocacy efforts.