Market participants may have underestimated the FX costs involved in the move to T+1 in North America, because they were not the primary focus during the implementation phase, when the emphasis was on settlement efficiency.
This is the view of Gary Wright, director of capital markets industry body ISITC Europe, who says investor costs have risen by around four to five basis points on the back of higher spreads and treasury funding expenses.
But as global financial markets follow North America toward T+1 and eventually real-time settlement, there is a growing need to fuse capital-market assets with liquidity management.
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