Name: BNP Paribas at Sibos 2023 – The global shift to T+1 settlement
Uploaded: 2023-10-03T15:02:12.096Z
Duration: 688.53
Description: At the Sibos 2023 conference in Toronto, FinTech Futures sat down with Camille Papillard, Head of Financial Intermediaries and Corporates at BNP Paribas, to discuss the move to T+1 settlement and whether T+1 will be a good fit for everyone.

07-Camille Papillard1_1.mp4

07-Camille Papillard.vtt

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{{00:00:05}}
This is Fintech Futures at
Sibos and I'm joined by Camille

{{00:00:09}}
Papillard of BNP Paribas.

{{00:00:10}}
Camille, thank you so much for
taking the time out to speak with us.

{{00:00:13}}
Just to get started, would you like to
yourself and your role at BNP Paribas?

{{00:00:17}}
Nice to meet you I'm Camille Papillard
and I'm Head of the Financial

{{00:00:21}}
Intermediaries and Corporates
current line for EMEA at BNP Paribas.

{{00:00:25}}
So it means that I'm heading
the project strategy and go to

{{00:00:30}}
market for banks and brokers and
corporates for BNP security services.

{{00:00:36}}
Excellent.

{{00:00:36}}
Thank you again so much for
taking the time to speak with us.

{{00:00:38}}
And you're speaking on a panel
about the move to a T plus one

{{00:00:40}}
settlement and whether T plus
one is a good fit for everybody.

{{00:00:44}}
Just to get started, can you give us
an overview of where we are with T

{{00:00:46}}
plus one globally now and evolving?

{{00:00:50}}
The countries are at very different stages
of their reflection or move to T plus 1.

{{00:00:57}}
Today, the vast majority of
countries is settling at T plus 2.

{{00:01:04}}
And, but we do have a few
countries who are already on

{{00:01:08}}
a shortened settlement cycle.

{{00:01:09}}
So you have Stock Connect in APAC,
that is settling on the same day.

{{00:01:14}}
And you have India who transitioned
to T plus 1 earlier this year.

{{00:01:19}}
The big move obviously is going to
be the us and North America as a

{{00:01:24}}
whole, that is going to shift to
t plus one next year May, 2024.

{{00:01:31}}
And then you have the UK who
set, who started a task force.

{{00:01:37}}
So who is seriously thinking about it
and EU and, but also some other markets

{{00:01:44}}
in apac like Australia and New Zealand.

{{00:01:47}}
Were just.

{{00:01:48}}
Thinking about it will you have the EU
that launched I think nine subgroups

{{00:01:54}}
about all the various aspects that
they need to think of before moving.

{{00:01:58}}
So very different stages on on this.

{{00:02:02}}
Excellent, excellent.

{{00:02:03}}
So what are some of the key benefits
then of deducting T plus one settlement?

{{00:02:07}}
So the key benefits are clearly
pre settlement risk reduction and

{{00:02:12}}
the liquidity that goes with it.

{{00:02:14}}
So if you reduce the time, When, between
you trade on a security and you expect a

{{00:02:22}}
delivery, you obviously reduce the time
during when your counterparty can default.

{{00:02:29}}
And if you, if your counterparty defaults
and you need to buy some new securities,

{{00:02:34}}
there, there can happen also some, there
can be some volatility on the market.

{{00:02:40}}
And obviously if you reduce the
time, you reduce the risk that

{{00:02:44}}
prices go upwards or downwards.

{{00:02:48}}
The first benefit is
really reducing that risk.

{{00:02:53}}
Then maybe more in the long term or
in the medium term, there is, there

{{00:02:58}}
should be some benefits on reducing
operational risk because as you reduce

{{00:03:04}}
the time you, are forced in a way to
streamline your processes, to automate

{{00:03:10}}
more and so we should be, we should see
some, benefits on that front as well.

{{00:03:17}}
Excellent.

{{00:03:18}}
Obviously you mentioned at the start
as well, it's, some countries have

{{00:03:21}}
been a bit slower to take this on.

{{00:03:22}}
What are some of the key challenges
then, do you think, of the

{{00:03:25}}
Moving to T plus one sentiment.

{{00:03:27}}
Yeah obviously not all the countries
have jumped into T plus one.

{{00:03:33}}
And there are many considerations
that need to be taken into account.

{{00:03:39}}
The, UK and, Europe are, quite
different markets from North America.

{{00:03:44}}
And thinking about Europe, it's
a much more fragmented market.

{{00:03:48}}
And so the story is going to be
very much different from the U.

{{00:03:52}}
S.

{{00:03:52}}
You have Much more market
infrastructures, being CSDs, being

{{00:03:59}}
CCPs and different countries.

{{00:04:02}}
So by the time that you need to have
everybody aligned it's obviously

{{00:04:09}}
not exactly the, same mechanisms.

{{00:04:13}}
You don't have the same currencies.

{{00:04:16}}
And, Moving to T plus one is not going to
be easy because there are, as you said,

{{00:04:21}}
some challenges on some instruments.

{{00:04:25}}
For instance, where we see a lot of fails.

{{00:04:29}}
We need to think about everything
that happens before settlement occurs.

{{00:04:33}}
Be it funding, being foreign exchange.

{{00:04:39}}
You have also a lot of yeah.

{{00:04:45}}
Different issues that you need to solve.

{{00:04:49}}
It's what are some of the
unexpected impacts then for,

{{00:04:51}}
international investors as well?

{{00:04:54}}
Obviously for international investors
there are some additional challenges.

{{00:05:01}}
So the very obvious thing
is the time zone difference.

{{00:05:06}}
So they'll need to work with
the the cutoff time that exists.

{{00:05:15}}
It it will be a challenge for them to
be able to meet the foreign exchange

{{00:05:23}}
cutoff, and then the funding ones.

{{00:05:27}}
International investors need
to rethink a bit the model.

{{00:05:31}}
So the very first obvious thing
would be, for instance, for them to

{{00:05:35}}
have to extend the working hours.

{{00:05:38}}
But if we go one step further I know
that some of them are also thinking about

{{00:05:44}}
relocating some teams to be able to cover
the, working hours in the right time zone.

{{00:05:55}}
And if we go again one step even
more down the road some of them

{{00:06:00}}
are also thinking about outsourcing
some of the of some activities that

{{00:06:07}}
were not the typical activities
that they would usually outsource.

{{00:06:14}}
So we've we had a survey recently
with value exchange and it

{{00:06:18}}
seems that some, companies are
now thinking about outsourcing

{{00:06:23}}
execution services, for instance.

{{00:06:25}}
So this is a, whole shift
for international investors.

{{00:06:31}}
Excellent.

{{00:06:32}}
And in light of some of the challenges
you've mentioned there, what would

{{00:06:34}}
you say is the best approach then
for shortening settlement cycles?

{{00:06:39}}
The, Obviously, there are a number of
things, and I think we covered some of

{{00:06:44}}
them we need to think about, and I think
in that perspective, Europe is really

{{00:06:52}}
taking a, very cautious approach, they
subdivided the topic into nine working

{{00:06:59}}
groups just to show the extent to which
it can impact the, post trade processes.

{{00:07:08}}
So there is one working group
about trading, about settlement,

{{00:07:13}}
but also about asset servicing.

{{00:07:15}}
This is something that we don't
necessarily think about, but shortening

{{00:07:19}}
the settlement cycle you're going to
have, for instance, some reverse corporate

{{00:07:25}}
actions that you need to, take care.

{{00:07:28}}
There's some impact on securities lending
funding, we talked about it, and some for,

{{00:07:35}}
on some foreign exchange, for instance.

{{00:07:38}}
We really need to identify all the
All that happens, everything that

{{00:07:46}}
happens before and after settlement,
and make sure that they are going to

{{00:07:54}}
be efficient enough to work under a T
plus one shortened settlement cycle.

{{00:07:59}}
In a way, I would say there
must be a phased approach.

{{00:08:03}}
But not necessarily in terms of timing
moving, for instance, some i zines

{{00:08:09}}
or but really tackling the different
aspects of it before moving to to,

{{00:08:17}}
to, the shortening settlement cycle.

{{00:08:21}}
Excellent.

{{00:08:21}}
Can you tell us briefly BNP Paribas
has been doing in this area as

{{00:08:25}}
Well If we think about the U.

{{00:08:27}}
S.

{{00:08:29}}
I think the very first thing that we've,
What we're doing is inform our clients.

{{00:08:35}}
We are very well placed because we are
in direct contact with DTCC, but also

{{00:08:41}}
very present in the industry workgroup.

{{00:08:44}}
Be it through articles, webinars,
we've been telling the clients how...

{{00:08:51}}
This will impact them.

{{00:08:55}}
Then we need to make sure that we have,
we'll be able to support the clients.

{{00:09:01}}
We started testing with them I think
it was mid August, to make sure that

{{00:09:07}}
it works end to end with the client.

{{00:09:11}}
And when I think about support,
it's also Leveraging our dual

{{00:09:17}}
office, so we've always had part
of the team supporting the U.

{{00:09:23}}
S.

{{00:09:23}}
based in Lisbon and typically
for when, you have a shortened

{{00:09:30}}
settlement cycle, it makes a lot
of sense because you have a team.

{{00:09:35}}
We can start looking at what failed
during the night time cycle, what

{{00:09:38}}
needs to be fixed when it's still
the middle of the night in the US.

{{00:09:44}}
So this is quite powerful.

{{00:09:45}}
And then we can think also about the
extension of services that we can provide.

{{00:09:50}}
to our clients to help them
in that in that transition.

{{00:09:56}}
And and I can think about execution to
custody services, for instance, where

{{00:10:01}}
you have a client, if you take the
example of an Asian client, he placed

{{00:10:05}}
the order with with a broker, so with
BNP, for instance, as a broker, and we

{{00:10:12}}
are able to instruct the settlement.

{{00:10:15}}
in the name of the client, so they don't
have to do anything but making sure that

{{00:10:19}}
they have the funding, we can manage the
affirmation, we can manage the settlement

{{00:10:23}}
instruction, and they have nothing to do.

{{00:10:25}}
So that really relieves the client
for a number of tasks that they would

{{00:10:29}}
have to do in a compressed timing.

{{00:10:33}}
And just to finish off, if you did
have to put a year on when the global

{{00:10:37}}
shift at C might be coming, when do
you think that might be complete by?

{{00:10:41}}
That's difficult to say.

{{00:10:44}}
When we had the survey with the
value exchange it came out that

{{00:10:49}}
I think 90 percent of our clients
think that we will move out of T plus

{{00:10:56}}
2 within a five year time period,
which seems very ambitious to me.

{{00:11:03}}
I think I saw a date in the UK that
might be 2026, so it's really tomorrow.

{{00:11:11}}
Maybe five years is a bit ambitious.

{{00:11:12}}
Let's say between five to seven years.

{{00:11:16}}
We'll see what happens.

{{00:11:18}}
Camille, again, thank you so much for
taking the time out to speak to us.

{{00:11:20}}
It's been a pleasure.

{{00:11:21}}
Thank you very much.

This is Fintech Futures at
Sibos and I'm joined by Camille

Camille, thank you so much for
taking the time out to speak with us.

Just to get started, would you like to
yourself and your role at BNP Paribas?

Nice to meet you I'm Camille Papillard
and I'm Head of the Financial

Intermediaries and Corporates
current line for EMEA at BNP Paribas.

So it means that I'm heading
the project strategy and go to

market for banks and brokers and
corporates for BNP security services.

Thank you again so much for
taking the time to speak with us.

And you're speaking on a panel
about the move to a T plus one

settlement and whether T plus
one is a good fit for everybody.

Just to get started, can you give us
an overview of where we are with T

The countries are at very different stages
of their reflection or move to T plus 1.

Today, the vast majority of
countries is settling at T plus 2.

And, but we do have a few
countries who are already on

So you have Stock Connect in APAC,
that is settling on the same day.

And you have India who transitioned
to T plus 1 earlier this year.

The big move obviously is going to
be the us and North America as a

whole, that is going to shift to
t plus one next year May, 2024.

And then you have the UK who
set, who started a task force.

So who is seriously thinking about it
and EU and, but also some other markets

Thinking about it will you have the EU
that launched I think nine subgroups

about all the various aspects that
they need to think of before moving.

So what are some of the key benefits
then of deducting T plus one settlement?

So the key benefits are clearly
pre settlement risk reduction and

So if you reduce the time, When, between
you trade on a security and you expect a

delivery, you obviously reduce the time
during when your counterparty can default.

And if you, if your counterparty defaults
and you need to buy some new securities,

there, there can happen also some, there
can be some volatility on the market.

And obviously if you reduce the
time, you reduce the risk that

The first benefit is
really reducing that risk.

Then maybe more in the long term or
in the medium term, there is, there

should be some benefits on reducing
operational risk because as you reduce

the time you, are forced in a way to
streamline your processes, to automate

more and so we should be, we should see
some, benefits on that front as well.

Obviously you mentioned at the start
as well, it's, some countries have

What are some of the key challenges
then, do you think, of the

Yeah obviously not all the countries
have jumped into T plus one.

And there are many considerations
that need to be taken into account.

The, UK and, Europe are, quite
different markets from North America.

And thinking about Europe, it's
a much more fragmented market.

And so the story is going to be
very much different from the U.

You have Much more market
infrastructures, being CSDs, being

So by the time that you need to have
everybody aligned it's obviously

And, Moving to T plus one is not going to
be easy because there are, as you said,

For instance, where we see a lot of fails.

We need to think about everything
that happens before settlement occurs.

It's what are some of the
unexpected impacts then for,

Obviously for international investors
there are some additional challenges.

So the very obvious thing
is the time zone difference.

So they'll need to work with
the the cutoff time that exists.

It it will be a challenge for them to
be able to meet the foreign exchange

International investors need
to rethink a bit the model.

So the very first obvious thing
would be, for instance, for them to

But if we go one step further I know
that some of them are also thinking about

relocating some teams to be able to cover
the, working hours in the right time zone.

And if we go again one step even
more down the road some of them

are also thinking about outsourcing
some of the of some activities that

were not the typical activities
that they would usually outsource.

So we've we had a survey recently
with value exchange and it

seems that some, companies are
now thinking about outsourcing

So this is a, whole shift
for international investors.

And in light of some of the challenges
you've mentioned there, what would

you say is the best approach then
for shortening settlement cycles?

The, Obviously, there are a number of
things, and I think we covered some of

them we need to think about, and I think
in that perspective, Europe is really

taking a, very cautious approach, they
subdivided the topic into nine working

groups just to show the extent to which
it can impact the, post trade processes.

So there is one working group
about trading, about settlement,

This is something that we don't
necessarily think about, but shortening

the settlement cycle you're going to
have, for instance, some reverse corporate

There's some impact on securities lending
funding, we talked about it, and some for,

FinTech Futures

Expert Insight

At the Sibos 2023 conference in Toronto, FinTech Futures sat down with Camille Papillard, Head of Financial Intermediaries and Corporates at BNP Paribas, to discuss the move to T+1 settlement and whether T+1 will be a good fit for everyone.