AccessFintech and BNY Mellon have partnered on a foreign exchange (FX) workflow solution ahead of North American T+1 implementation. AccessFintech’s Pardeep Cassells and Craig Sterling talked to Global Trading about how what the service brings to the table.
With the new solution, those using AccessFintech’s network will be able to instruct BNY Mellon to broker FX transactions based on ‘predicted to settle’ insights before the end of the US trading day. This will provide greater liquidity for international clients trading US securities, the firms stated.
“‘Predicted to settle’ uses our Synergy platform, creating insights that show us whether there are any differences in the two bookings,” Craig Sterling, head of securities product, told Global Trading.
“If it’s a matching market then we can additionally ingest market intelligence and see whether it’s matched in the market and ready to settle. If it’s in a non-matching market, we can take those insights, put them together and say, ‘we can see that you’re going to be in place, and by settlement date, you should settle that transaction – assuming your inventory is in the right location’,” he continued.
Pardeep Cassells, global head of buy-side customer experience, added: “Conversely, [if we find] it’s not going to settle and we’re going to have a problem then we’re opening up an avenue for those organisations to start course correcting prior to settlement date. Because our date is real time, they can do this immediately on T+0.”
With the shortened settlement cycle, international brokers and investors working across jurisdictions and timezones will have to manage their FX requirements on trade date, the companies explained.
When security transactions are left with the broker to execute during US market hours, FX requirements will only be available after hours. As a result, the local FX funding window will have to be executed on a same-day basis in a less liquid market than is currently seen in the T+2 cycle – in which FX is executed during US trading hours the previous day.
“Everything we’re doing here is totally relevant for every market that moves to T+1 – or even T+0,” Sterling affirmed.
Cassells went on to emphasise how AccessFintech has been working to support the FX landscape for the expected shift to T+1 outside of North America. “T+1 regulations on FX in the US have been less well-defined than in the UK and Europe,” she explained.
“In the UK, we’re working as part of the accelerated settlement task force; in Europe, we work pretty closely with AFME. Both of those groups are more minded towards incorporating the FX cycle into the planning and impact assessment of a move to an accelerated securities settlement cycle.”
Either way, the support that we provide is going to kick in and help those firms but I think the magnitude of what’s happening in the US and the fact that the FX settlement cycle hasn’t been touched is problematic in a different way.”
The platform does not use AI, Cassells explained, differentiating it from others in the market. “We’re not looking at past performance to predict a future problem, we’re assessing the transactions in real time. It’s a case by case, trade by trade review.”
Jason Vitale, head of global markets trading at BNY Mellon, said: “Our collaboration with AccessFintech will provide clients the ability to leverage our recently launched Universal FX platform to fund their T+1 settlement activity in an efficient and transparent manner.”
Cassells concluded: “We’re excited to be stepping into this territory. We’ve been asked to look at FX for a really long time. We’ve turned this service around relatively quickly, and working with [BNY Mellon] sets us up for supporting across the market. We’re looking forward to supporting more and more organisations.”
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