Asian Back Offices Need Speed as T+1 for US Equities Draws Closer
A new paper from ValueExchange and Digital Asset shares insights into the operational challenges and digital transformation needed to meet regional demand for North American equities.
To meet the T+1 settlement cycle, 96% of settlement instructions from Asia to the US and Canada must be accelerated within the next nine months.
Digital Asset, in partnership with The ValueExchange, published a new factsheet entitled Making Global Settlements Work in Asia. The factsheet, also co-written with Swift, outlines the case for transformation in the Asian back office today in the context of accelerating settlements and time-critical processes. This research provides new insight into the operational challenges faced by back offices in Asia. It sets out the case for urgent digital transformation, especially to meet regional demand for North American equities as the US moves to a T+1 settlement cycle in May 2024.
In the paper, the ValueExchange found that nearly half of Asian institutional investors’ trading (49%) and 39% of retail trading is in North American markets – but that settlement of these trades is currently a multi-day process. To meet the T+1 settlement cycle, 96% of settlement instructions from Asia to the US and Canada will have to be accelerated within the next nine months, requiring most Asian back offices to remove at least one day from their current settlement processes. Swift also estimated that around 80% of global equities are set to move to T+1 over the coming few years.
The paper also noted that accelerating settlement processes are hampered by the fact that Asian back offices have the highest proportion of legacy technology globally, according to ValueExchange. Forty percent of Asian back office systems are more than ten years old, and 16% are reaching their ‘end-of-life' point in the coming three years. ValueExchange found that 58% of Asian brokers don’t believe their systems are fit for growth – and that 50% are planning large-scale technology transitions over the next five years.
Digital Asset and The ValueExchange will continue the T+1 and settlement efficiencies discussion at Sibos, Sept 18th - 21st in Toronto; join us in sessions or at the Digital Asset booth, J24.
Click here to download a PDF of the factsheet.