Update on the impact to CLSSettlement following the move to T+1 for securities settlement in the US

9 July 2024

We committed to updating the market on whether there has been any impact to CLSSettlement following the T+1 implementation in the US securities market on 28 May 2024.

Throughout June, we monitored CLSSettlement average daily settlement values and volumes and can confirm there has been no decrease in either metric. In fact, CLSSettlement average daily settled values increased from USD6.6 trillion in 2023 to USD7.1 trillion (year-to-date), and June 2024 was a record month with average daily values of USD7.8 trillion.1

We have seen a slight uptick in fund-related submission values to CLSSettlement starting from 14:00 CET onwards, with a more pronounced increase between 22:00 and 23:00 CET followed by a decrease after 23:00 CET. The initial increase is more significant than the subsequent decline, suggesting no overall loss in submission values. While we cannot definitively attribute the observed growth to the transition to T+1, there are early signs suggesting that the shortened settlement cycle is influencing behavior within the asset manager and fund communities during this time period.

For example, the increase observed from 14:00 CET could indicate an increase in funds executing the FX component of a security before confirmation of the security trade execution. The increase between 22:00 and 23:00 CET may suggest that funds are still able to submit their securities-related payment instructions to CLSSettlement, possibly due to enhanced process automation and support from global custodians in adjusting cut-off times ahead of the CLS 00:00 CET initial pay-in schedule (IPIS) deadline.

CLS will continue to monitor and analyze its transaction data and will provide further updates as appropriate. In the meantime, prioritizing execution and operational efficiency across the asset manager and fund communities remains paramount. CLS will continue to work closely with its settlement members, asset managers and the wider ecosystem to explore possible solutions to address any challenges that may arise from the transition to T+1.

1. Note that CLSSettlement’s ADV is impacted by various other factors such as market activity resulting from both economic and non-economic events.


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