Proposed EU move to T+1 could eradicate ‘suboptimal’ ETF dynamics

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Financial Times 13h ago

Proposed EU move to T+1 could eradicate ‘suboptimal’ ETF dynamics - Financial Times

Quick Summary:

When demand for their ETFs rise, they need to buy the underlying constituents, which settle in T+1, on the following day, but have to wait another day to receive payment, due to Europe’s current T+2 model.

The rise in costs has been hard to quantify, involving elements such as the cost of hiring additional staff to deal with settlement, automation of systems and the cost of funding trades.

James Maxfield, chief product officer at Duco, which provides artificial intelligence-powered data solutions to the financial industry, said custodians and banks had added a lot of people to their operations to smooth the transition to T+1.“This is not sustainable in the long term.