The US settlement revamp, which will shorten the settlement cycle for US securities, is creating new risks in the US$6.5 trillion FX market. The shift to a one-day settlement deadline poses challenges for overseas investors, reducing the time available to complete currency trades used to fund their purchases of US securities. Baton Systems, a post-trade firm, offers a solution to streamline FX execution and mitigate settlement risk. They utilise distributed ledger technology to net and settle FX trades for investors who miss their window to do so in CLS, providing an alternative to outsourcing FX execution to custodian banks.
