Commentary

John Turney
Traders Magazine Online News

Foreign Exchange Infrastructure: Yesterday, Today and Tomorrow

In this exclusive to Traders Magazine, John Turney, Global Head of Outsourced FX at Northern Trust, discusses the evolution of the fx infrastructure and what is to come.

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November 1, 2001

Next Day Unsettled

By Gregory Bresiger

The three-day securities processing standard could be safe for another year.

Next day transaction processing - the so-called T+1 - could be delayed by one year. It should now become effective in June 2005, the Board of Directors of the Securities Industry Association has recommended to the Securities and Exchange Commission.

"The industry remains committed to straight-through processing leading to T+1," according to Donald Kittell, executive vice president of the SIA. However, he conceded that this "less aggressive pace" is needed so firms can "complete critical technology projects." He added that the events of Sept. 11 emphasize the need for more extensive straight-through-processing as well as the reduction of manual processing of trading information and the physical movement of check payments and securities.

Industry Testing

The new schedule would mean that those securities firms that expect to be ready for T+1 must be ready by the middle of 2004. They would be required to participate in a full year of testing so they could certify that they would have the technological infrastructure to meet the new standard in 2005.

Securities transactions now clear and settle in three business days after the transaction. The new T+1 standard - when it becomes effective - would mean trades would clear and settle on the next business day.