The Association for Financial Markets in Europe (AFME) post-trade manager Pablo Garcia said current execution and settlement issues for ETFs would likely be “exacerbated” if Europe moved to a T+1 settlement cycle.
In a recent webinar, titled ETF Investigations: The Challenges of T+1 Settlement in Europe, Garcia said settlement fails could increase as a result, but that certain tools could be used to mitigate the issues.
“Settlement efficiency is a key element that needs to be considered prior to taking any decision on a T+1 move,” he said.
“The industry currently has matching issues and a lack of harmonisation, all the issues that exist between execution and settlement would just be exacerbated in a compressed settlement scenario.”
He added settlement fails would be likely to increase as a result.
Despite this, Garcia noted tools such as the implementation of partial settlement could help improve settlement efficiency in the future.
“Encouraging partial settlement would likely be a very powerful tool in improving settlement efficiency and therefore creating a more comfortable position if the decision comes to implementing T+1 settlement,” he said.
Speakers in this webinar include:
Jim Goldie, head of ETF capital markets and indexed solutions, EMEA, Invesco
François Baratte, senior affairs advisor at ALFI
Pablo Garcia, post-trade manager at AFME
ETF Investigations is a new webinar series from ETF Stream which examines the key issues facing ETF investors in Europe. To watch a full replay of this webinar, click here.
