WFE Drops Bombshell T+1 Settlement Guide – Traders, Brace for Impact
Wall Street''s settlement shakeup just got real. The World Federation of Exchanges (WFE) dropped its long-awaited playbook for the industry''s forced march to T+1 – and the clock''s ticking louder than a margin call alarm.
Why This Hurts So Good
Faster settlements mean less counterparty risk... in theory. But behind the polished guidance lies a trillion-dollar game of operational Jenga. Prime brokers sweating collateral management. Hedge funds scrambling to reconcile trades before lunch. Crypto? Already laughing from its 24/7 settlement throne.
The Naked Truth
No more hiding behind ''processing delays'' when your back office blows it. T+1 turns settlement fails into public floggings – just what finance needed: more transparency masquerading as accountability.
Tick tock, legacy systems. The future''s coming whether your COBOL code''s ready or not.
The World Federation of Exchanges (WFE), the global industry association for exchanges and central counterparties (CCPs), has published industry-wide guidance on the complex mix of operational, regulatory, and strategic considerations for shortening securities settlement cycles.
The paper draws on lessons learned from recent transitions in markets including India, the United States, Canada, and Latin America, and offers a roadmap for jurisdictions seeking to MOVE safely and efficiently from T+2 to T+1 settlement.
In publishing the guidance, the WFE emphasises the importance of thorough industry collaboration, operational readiness, and technological investment to ensure successful implementation and warns against premature moves beyond T+1 without clear justification and market preparedness.
The guidance identifies seven key imperatives for a successful transition to T+1:
commented, “We urge regulators and market participants to engage in structured, phased transitions supported by clear roadmaps, robust cost-benefit analysis, and inclusive governance structures.”
“It is vital to look at T+1 as a cost-benefit question. The powerful effect of multilateral netting, which can only be achieved through centralised market infrastructure, has clear advantages. So, while shortening the settlement cycle can reduce margin requirements, there is a balance to be struck and, as our paper makes clear, the costs of going further WOULD include compromising market liquidity.”
Read the full response here.
Source: WFE
