Another and more realistic take is that it was always going to be a tough job to get a 24-strong board representing many of the diverse participants in the industry to agree so readily to what would have been such a fundamental change. This is a point that Jonathan Butterfield, CLS’s executive vice-president of communications and marketing, is keen to stress.
“It’s very rare, if you are talking about a big industry-level change, to be able to roll out a new vision straight away. There are a lot of different banks to get to agree,” he says.
Butterfield believes that the issues surrounding the benefits of trade netting have been slightly misreported. “Gross settlement is still seen as the best solution for a majority of banks in the market,” he says. “The only solution (to ticket and processing pressures) that some people perceive is to net trades. But there is a real divergence of opinion and not everybody is comfortable with that. At the moment, we are told there’s no majority to adopt pre-settlement netting among our largest members.”
Clearly, the prime brokers have been vocal proponents of pre-settlement netting, but Butterfield points out that FX flow stems from multiple sources.