The article discusses the increase in settlement risk due to the growth of trading in new currencies, particularly in emerging markets. Settlement risk refers to the risk that one party in a transaction fails to fulfil their obligation, leading to financial loss for the other party. The article highlights the importance of effective settlement systems, particularly the use of baton systems, which enable the simultaneous exchange of currency and securities, thereby reducing settlement risk. The article also emphasises the need for market participants to remain vigilant and take necessary precautions to mitigate settlement risk.
