AFME’s Garcia: Execution issues will be ‘exacerbated’ under T+1

‘Settlement efficiency is key’

The Association for Financial Markets in Europe (AFME) post-trade manager Pablo Garcia said current execution and settlement issues for ETFs would likely be “exacerbated” if Europe moved to a T+1 settlement cycle.

In a recent webinar, titled ETF Investigations: The Challenges of T+1 Settlement in Europe, Garcia said settlement fails could increase as a result, but that certain tools could be used to mitigate the issues.

“Settlement efficiency is a key element that needs to be considered prior to taking any decision on a T+1 move,” he said.

“The industry currently has matching issues and a lack of harmonisation, all the issues that exist between execution and settlement would just be exacerbated in a compressed settlement scenario.”

He added settlement fails would be likely to increase as a result.

Despite this, Garcia noted tools such as the implementation of partial settlement could help improve settlement efficiency in the future.

“Encouraging partial settlement would likely be a very powerful tool in improving settlement efficiency and therefore creating a more comfortable position if the decision comes to implementing T+1 settlement,” he said.

Speakers in this webinar include:

  • Jim Goldie, head of ETF capital markets and indexed solutions, EMEA, Invesco

  • François Baratte, senior affairs advisor at ALFI

  • Pablo Garcia, post-trade manager at AFME

ETF Investigations is a new webinar series from ETF Stream which examines the key issues facing ETF investors in Europe. To watch a full replay of this webinar, click here.


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