The shift to T+1 in the American securities space impacts the wider foreign exchange (FX) ecosystem because approximately 20% of securities and 17% of equites are held outside the US.^[1] Due to time zone differences, European and Asian investors and asset managers have much less time to mobilize currency to fund a US or Canadian securities trade if it settles on a T+1 basis. As a result, it was feared that requiring these securities trades to settle the following day could force investors to execute and settle an FX trade on a same-day (T+0) basis to secure the necessary funding. In other words, there was concern that a shift to T+1 for securities settlement could push FX to T+0, at least for some parts of the FX market.

CLS analyzed its transaction data to assess the potential impact of the shorter settlement cycle on CLSSettlement and engaged extensively with the industry before the May 2024 transition. Based on this analysis, it was expected that only around 1% of CLSSettlement’s average daily settlement value of approximately USD7 trillion could potentially be impacted by the transition, representing business that may be linked to non-US investment funds trading in US securities. However, CLS’s post-transition analysis found no negative impact of the T+1 transition on CLS’s business. In fact, CLSSettlement average daily settlement values (ADV) actually increased, from USD7.0 trillion to USD7.6 trillion. The data indicates that both buy and sell sides adjusted their arrangements ahead of the move where needed.