- The move to next-day settlement for trading in U.S. securities on Tuesday will require exchange-traded funds and the marketmakers to juggle multiple jurisdictional requirements and capital needs, market participants said.
The primary impact will be felt by asset managers whose funds include European holdings, since China and India already have accelerated their settlement periods and Canada, Mexico and Argentina also made the switch this week, said John Hooson, managing director of ETF services at BBH.Such dislocations, he added,"will have to be solved with an authorized provider posting additional collateral.
"That may lead to wider bid/asked spreads and reduced liquidity as people try to address all these mismatches," Rosenbluth said. He added he expects this to be a short term challenge that"will work its way through the markets over a few weeks."