Faster, faster, faster.

These days, it seems everything in financial services is racing to speed things up. Faster payments, faster settlement, faster document checks, faster decisions. Faster. Faster. Faster. And while there’s plenty to be gained from all this newfound speed, it does raise some fas(t)inating questions about what might get lost along the way.

Our slow read this week looks at Europe’s upcoming move to T+1 settlement. With the EU, UK, and Switzerland preparing to cut the settlement cycle in half by this time next year, there’s still a lot more to consider and a lot more work to be done. The US may have made the switch look relatively painless, but, with thirty-two markets, dozens of clearing houses, multiple currencies, and a whole lot of coordination, Europe has a rather different task ahead of it.

Elsewhere, the third and final instalment of our AI in trade finance series asks how we train the next generation of experts if AI takes over the routine work that junior practitioners have traditionally learnt from. We also revisit Sibos for a look at how data and policy are shaping the future of global trade and explore why certainty over the amount received matters so much in cross-border payments.

From the studio, there’s more on the role of AI in trade education, the challenges of bringing tokenisation into transaction banking, and why even the smartest payment technology is of limited use if nobody can agree on where the money actually is.

As for the TTP team? We’re happy to be slowing things down a little bit now after what has been an intense several weeks of travel, conferences, and events. But that doesn’t mean there isn’t lots coming your way in the weeks to come. Keep an eye out because, as always,  there’s plenty to read, watch, and learn.

Until next time — full speed ahead (carefully).

— Carter Hoffman, Deputy Editor

Country of the Week: Panama

Did you know that Panama has one of the world's largest merchant shipping registries, even though many of the vessels flying its flag have never visited the country? Since 1925, Panama has allowed foreign shipowners to register their vessels there, offering lower costs, favourable tax arrangements and more flexible operating rules. Known as a 'flag of convenience', the system allows a ship owned in Greece, managed in Singapore and sailing between China and Europe to operate under the Panamanian flag.

Panama trade stats (2024):

Slow Read

Europe catches the midnight train to T+1

A year before the EU, the UK, and Switzerland move to next-day settlement, BNP Paribas’s Camille Papillard, Deputy Head of Financial Intermediaries & Corporates Client Line for Securities Services, explains why the hard work happens before midnight, and why Europe cannot simply copy America’s homework.

Above the door of the Exchange on Corn Street in Bristol hangs a clock with two minute hands, set about ten minutes apart. One shows Bristol’s own time, which runs behind London’s because the city sits further west. The other shows London time, which the Great Western Railway adopted for its timetable in November 1840. For several years the city lived by both, so a train timetabled to leave Temple Meads at noon left at ten to twelve by Bristol’s own time. Bristol officially adopted Greenwich time in 1852. The extra hand is still there.

Europe’s securities markets are a year from their own railway-time moment. On 11 October 2027, the EU, the UK, and Switzerland will move together from T+2 to T+1, cutting a day from the time between trade and settlement. To make room, the TARGET2-Securities night-time settlement cycle is being moved from around 20:00 to midnight CET, and EU rules will expect settlement instructions by 23:59 CET on the day of the trade, where feasible.

Camille Papillard, who is responsible for the products and solutions offered to bank, broker, and corporate clients at BNP Paribas’ Securities Services business, plays a pivotal role in the bank’s T+1 programme. On paper, the change looks modest, she said. “It’s a compression of the time between trade date and settlement date, so it’s a compression by a day. But in reality it’s even more than this, because you need to do things on trade date, which compresses from two days to a few hours.” BNP Paribas estimates that firms currently have 12 to 14 hours to manage their settlements and will soon have a few, which Papillard called “an 80 per cent reduction in time”.

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