For over a year, trade associations and industry working groups have been warning that the transition to a T+1 settlement cycle for US, Canadian and Mexican securities would be one of the biggest structural changes to hit the foreign exchange market in years.
There were even doomsday predictions that 40% of daily flows from European asset managers – worth between $50 billion–70 billion – could be forced to settle bilaterally outside of the CLS platform, leaving them without the protection provided by payment-versus-payment (PvP) settlement.
Well, the May 28 deadline came and went, and to many FX participants the transition was one of the biggest non-events in recent times.
Dealers and custody banks say the supposed bilateral settlement risk,…
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