The BCRA Aligns Foreign Exchange Transactions Settlement Term with International Practices

The BCRA will change the settlement term of wholesale transactions from T+0 to T+1 in line with the initiative promoted by the main international markets.

As under Communication B 12796, the BCRA will participate exclusively in the T+1 term of the CAM 1 round of the SIOPEL system at Mercado Abierto Electrónico (MAE). The BCRA will implement this measure as from June 3, 2024 lest the open contracts to be settled on May 31, 2024 (exchange rate benchmark as under Communication A 3500) be affected.

In addition, the BCRA will change, on the same day, the system for settling foreign currency purchases and sales for the multilateral-cleared settlement system called MAEClear of MAE to make the process simpler and more effective. This measure supplements the migration to the MAEClear system that started in January-in accordance with Communication B 11384 to settle transactions arranged in the MOME round (swap transactions between MEP accounts and correspondent accounts with T+1 settlement).

The remaining market traders will be able to continue settling their transactions within the usual settlement terms, both bilaterally and through MAEClear.

The most important markets in the world are synchronizing their settlement terms following the US Securities and Exchange Commission's decision, which involved a reduction of the settlement term from T+2 to T+1 for certain transactions. At a local level, Argentine stock exchange markets (Bolsas y Mercados Argentinos, BYMA) announced a drop in the settlement term from T+2 to T+1 for stock and bond trading, causing most of the market's turnover to be settled within this term. These changes enable the local forex market to bring its usual settlement term to T+1.

A harmonized settlement cycle of different assets contributes to the integration of different financial markets. Thus, hedging and arbitrage transactions that usually involve different financial assets and operate with different settlement terms are expected to be more effective as well as market participants' price formation and liquidity management processes. In addition, there will be greater integration, making foreign investment transactions easier by matching the settlement term of the local and international forex markets.

The migration to the MAEClear system to settle foreign currency purchase and sale transactions with T+1 settlement implies moving from a bilateral settlement of transactions, in which all of them are settled, to a single daily movement for the net amount to be settled with the rest of institutions that participate in the system. This will significantly reduce the time for processing settlements.

May 9, 2024

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