US trading changes threaten to bruise Australian brokers
As the world’s biggest markets get ready to accelerate trades, market makers warn Australia risks getting left behind.
Australian brokers and market participants are worried billions of dollars of Wall Street trades could fail after a major change to US settlement cycles takes effect in the coming months.
From 28 May, the United States and Canada will move to T+1 settlement, meaning cash and equities exchange hands a single day after a trade is made. It will push North American markets one full day ahead of Australia, which will remain on the old T+2 system.
Financial infrastructure provider FinClear believes some local intermediaries and brokers aren’t prepared for dealing with the out-of-step processes and will get caught out.
“We are facing a misalignment of markets and it really could not have come at a worse time as investors look to increase their exposure to global markets,” Andrea Marani, FinClear’s head of clearing and settlement, told Capital Brief.
