T+2 to Become Global Settlement Cycle says Omgeo

Europe’s current T+2 settlement cycle will become the global standard within 10 years, according to post-trade provider Omgeo.

According to a study published by Omgeo, which is wholly owned by the Depositary Trust & Clearing Corporation (DTCC), 80% of buy-and sell-side respondents believe T+2 will become the global standard for settlement cycles.

Currently, Europe and Hong Kong are the only markets with a T+2 cycle. Just over half of respondents expect the U.S. to move from T+3 to T+2 within the next three years, while 34$ believe Canada and Japan will do the same.

“Harmonising settlement cycles globally will help to better facilitate cross-border trading, as well as reduce margin and liquidity requirements during market volatility. So far, Europe’s move to T+2 has been smooth, as recognised in the survey. However, there are still wide-ranging views on failed-trade penalties and on the sanctions that should be implemented for non-adherence. The future will bring further change, with more detail expected on the settlement discipline regime,” says Tony Freeman, executive director of Industry Relations, Omgeo.

The survey consisted of 583 participants globally, of which 47% were from the Americas, 39% from EMEA region, and 14% from Asia Pacific.