Tara Taylor: I would say there are a few things. One is making sure that they fully understand their current workflow to figure out where there are gaps, because lots of times managers think, "Oh, no problem. You know, we do this today." But really there are a lot of starts and stops right in their workflow. So I'd say the first thing is identifying how they are trading: Are they doing it manually? In an electronic fashion? And where are they executing? Is it in multiple locations? Is it in one office? Or centrally located? One country? Those things matter obviously from a timing perspective. Because now, with a whole 24 hours being shortened in the cycle, deadlines become really important. And it's really important for clients to understand where they're executing, and how they're executing so that they can make some decisions going forward.

TT: I think it depends. There are so many areas that weigh in on this change. So from a buy-side execution standpoint – when a client is actually buying or selling the underlying security trade and dealing with brokers – that is where they're very focused because they need to be able to affirm that trade in a much shorter timeframe. That timeframe will be 9 p.m. Eastern Standard Time (ET) globally.

Brokers are also looking at their process to make sure that they've got the right automation in place to meet these compressed timeframes. Today, brokers may be affirming trades on T+1, but now they have to do it on trade date, and a lot of clients are really pushing to have them do it immediately after the equity close at 4 p.m. (ET), so they'd like their confirmations and everything done between 4 and 4:30 p.m., so they can still do execution of FX.

And then also from the buy side, making sure that their systems and communications are in place to be able to take in that affirmation, and then be able to queue up a foreign exchange order to send to the sell side. From a sell-side perspective, I think it's looking again at services and products that will meet clients’ needs. I believe because of this shortened timeframe there's going to be a big need for execution later in the day, between, say, 4 and 5:00 p.m. ET, to be able to do an execution on the trade date. Having an automated execution process in place to get those orders and execute will be very important. We are also getting prepared for a shift to see more same-day value or cash trades. So a client will affirm their trade tonight, and then tomorrow they want to do a foreign exchange, and it will settle same day. I think that's definitely going to be a shift.

TT: The market is waiting for the outcome of the Canadian and US markets making this switch first. We do know that Mexico has definitely expressed interest, and Latin America more generally as well. I don't think they have a confirmed date, but Mexico will most likely follow next, with the UK in late 2025. The remainder of Europe will follow the UK. So there will be a gap for a bit with only a few markets in T+1. But once those larger markets go first, everybody else is going line up.

TT: Not that we have heard. But a lot of managers already have a large amount of cash settling in USD to help them with this change. They will still need to look at things like Friday settlement and holidays in their workflow.

In the case of APAC, I would say that automation will be key to meet the shortened deadlines and some clients may need to think about adding staff and extra support during US hours. Some emerging markets in Asia may not permit trading and settlement offshore (outside of APAC). This means time to execute both the FX and equity trade may take more than one day to complete. In this scenario, clients may need to consider pre-funding to settle these trades in the compressed timeframe.

TT: Most managers prefer to execute their FX after their underlying security trade has been confirmed and matched, to avoid any discrepancies in funding needs. If managers are not able to confirm and match in a timely fashion, they may need to send their FX orders on unconfirmed positions that are subject to change, creating a funding gap. So if they're not able to affirm or confirm their trades in a timely fashion, they may need to prefund their trades. So that changes their workflow.

That's why it's so important for clients to really look at their workflow front-to-back. It's almost like a snowball rolling downhill. As you look at one thing it impacts another and compounds. When you get to the bottom of the hill you have a big snowball with all these issues that you have to deal with. So we're big advocates of making sure that clients start to identify pain points, gaps and areas where they can automate. That's probably one of the biggest takeaways here; automation is definitely something that people are going to have to do to meet these shortened deadlines.

TT: So, automation is key. I think everyone's looking to identify quickly where they have a manual process, because they're really not going to be able to sustain that. Also, I think a lot of banks and brokers are probably pushing back, arguing that they won't be able to do things manually anymore. So if clients are sending faxes or using the phone, they’re going have to change that behavior quickly.

The second thing is understanding where execution is taking place and the timing of that. We have had some clients tell us that they're trying to execute in ET time zones as much as possible. So they're either creating jobs or relocating staff to different locations on the US East Coast or Canada. It is a great opportunity for operations teams to revamp old processes and simplify workflows.

Lastly, if clients have multiple systems, then ensuring those systems can talk to each other and are connected is essential. I think people are often amazed because they think things are automated but they're really not, and there are people behind the scenes actually doing something. When we talk about their workflows, they say, "I had no idea that there was a person in the middle of this. It just looked to me like it happens."