The impact of T+1 on the foreign exchange (FX) market will largely depend on how asset managers and owners handle their FX in the compressed settlement environment. Those trading their own FX may need to improve upstream trade-related processes, ensuring that they generate the exact amounts of FX in advance of applicable cutoffs. 另外, managers may look to utilize a custodian-outsourced FX Standing Instruction model that generally requires fewer process changes to accommodate the shorter settlement window.
不管外汇模型如何, a significant portion of FX transactions already settle on T+1 or even T+0. 在很多方面, it will be “business as usual” for the execution of FX transactions when the compressed T+1 framework becomes a reality in North America next May. That said, the shortened framework creates an added layer of complexity in matching equity trades and generating FX to fund the trades.
依托上游贸易活动
The efficient processing of FX transactions to fund cross-border trades relies on activities in the upstream securities trade process. Effective front-office technology will help ensure trades are booked efficiently, instructions are communicated in a timely manner and settlement of the FX transaction occurs as expected.
Custodians have a natural advantage when it comes to mitigating the T+1 effect on FX. Their strength is underpinned by proximity to the underlying security trade and dynamic connectivity between the custody and FX execution processes. The custodian’s ability to execute and settle FX trades directly within the account on the back of the FX trade is a powerful value proposition.
相关:不要拖延- T+1结算迫在眉睫
对资产管理公司的考虑
处理多个潜在客户的资产管理公司, brokers, custodians and other managers may face FX challenges in the new settlement regime. The need to coordinate security trades with these different parties can make it difficult to provide a finalized amount of foreign currency in advance of the applicable cutoff.
One option that has recently been gaining momentum is for managers to outsource supporting functions such as post-trade operations—commonly referred to as the “middle office”—to a third-party specialist with the technology, subject matter experts and scale to automate and manage costs over the longer term. Improving and consolidating the pre-trade Order Management Systems and post-trade middle-office functions can have a positive effect on both the underlying security trade and the subsequent FX trade.
最重要的是, managers are increasingly looking to outsource the FX requirements associated with their global investment portfolios. 集成 between a middle office provider and an automated FX execution platform helps to ensure that security trade information is exchanged, 外汇交易被执行, 准确而及时地.
对资产所有者的考虑
T+1 is also serving as the impetus for asset owners to examine their FX processes with a view to improving execution efficiency and, 作为一个潜在的额外好处, 他们基金的表现.
As asset managers look to consolidate their middle office and other support functions, 合并外汇执行的好处与单一, custodian-agnostic counterparty are worthy of consideration by asset owners. 这样可以将外汇风险转移给外部专家, reducing costs through scale and trade netting across multiple investment managers and custodians. In addition to helping owners better understand their overall risk profile, FX consolidation facilitates consolidated reporting and consistent Service Level Agreements through a single process and point of contact.
While centralized FX execution is important from an efficiency perspective, 它还提供了一个更好的画面，外汇执行的真实成本. Agreeing on a contractual spread for automated FX execution with a centralized provider allows for greater transparency into the total FX costs. 一旦量化, these costs can provide owners with a more accurate view of investment fund performance.
管理人员和业主的附加解决方案
There are various “add-on” solutions for asset managers and owners to consider as they enhance their FX processes in preparation for T+1. 例如, 外汇常备指令的使用, 如前所述, 能够在24/5的基础上自动执行操作外汇. 常设说明是监护人不可知论的, including the ability to integrate dynamically with custody or centralized middle office trade management functions. 另外, conditional order routing sets parameters to facilitate timely FX settlement and can be customized to ensure all currencies meet applicable cutoffs.
现在行动的重要性
It is essential for asset managers to review their existing trade execution and settlement processes in preparation for the compressed T+1 regime. And asset owners have access to a variety of options designed to improve FX management and meet the requirements of a shortened settlement window. 对于双方利益相关者, 这些变化可能需要提高自动化程度, 外包给第三方专家, 采用新服务或这些替代方案的组合.
无论如何, managers and owners alike must move quickly to enhance their operating models, 随着T+1时钟滴答作响，2024年5月即将到来. The risk of not making the necessary system and process changes will have significant adverse effects on stakeholders’ ability to operate effectively in a post-T+1 environment.
本文最初发表于 RBC我们的见解 2023年11月20日.