CREST alumni outline the future of post-trade

Brexit, blockchain and T2S all discussed on the 20th anniversary of CREST.
By Jonathan Watkins

The post-trade space is set to go through a major transition phase due to Brexit, T2S and the imminent arrival of blockchain technology, according to a panel of industry experts.

Post-trade veterans gathered to celebrate the 20th anniversary of CREST – the straight-through processing (STP) settlement system – and to discuss the future.

Jason Nabi, head of EMEA for blockchain company Paxos, highlighted how the post-trade sector is behind the curve when it comes to automation and technology advances.

“Post-trade is manual and expensive. The last thing you want to do is reinvest because it works.

“This isn’t about costs it is about delivering capital efficiencies. We are going to have a three-year cycle where we will see real world examples.”

Through T2S and blockchain, the post-trade environment could look entirely different within 10 years. Euroclear went live with T2S on three of its European central securities depositories (CSDs) last week, and while the UK isn’t involved at present, John Trundle, CEO of Euroclear UK and Ireland hinted that this might not always be the case.

“The Band of England didn’t want to give up its settlement to another system, so the UK didn’t want to join T2S,” said Trundle. “Brexit changes the political context where one can make that decision.”

“We will consult users to see what way they want it to go.”

Brian Healy, director, traded markets, development, operations for the Irish Stock Exchange, also highlighted how Brexit would have a major impact on the market, describing the event as “unravelling of 15 years of single market integration”.

“This probably was an unneeded injection of volatility and uncertainty,” he explained. “I don’t think the markets are going to wait for three years, there will be movement before then.”

Much of the future development of European settlement was put down to collaboration, whether it be for collateral, moving to T+1 or T+0 and blockchain implementation.

One participant called on central counterparties, CSDs and institutional investors to work together and come up with ways of mobilising collateral, something increasingly important due to new derivatives trading requirements.