Bloomberg Launches T+1 Fixing Rates

Following the changeover in North American securities markets to T+1 settlement, Bloomberg Index Services has launched what it says are the only T+1 FX fixings available to the market via its BFix service.

The T+1 switch has increased the pressure on client system by narrowing the window in which transactions can be processed and settled. Using the BFix value T+1 rates, users can send FX orders into their executing counterparts without being physically present in the designated time zone. While sell-side banks can currently offer this service through forwards desks on a T+1 basis taking opposite risk from the spot desk on a T+2 basis, the forwards desk inherits a tom/next FX swap which may ultimately impact banks’ credit facilities when done in sizable volumes. Bloomberg says that using the new T+1 benchmarks, banks can seek to match or net orders to reduce credit impact at scale.

The initial launch includes 20 deliverable currencies against the dollar – the euro; the Australian, Hong Kong, New Zealand and Singapore dollars: Sterling; Japanese yen; Swiss franc; the offshore deliverable Chinese renminbi; Czech koruna, Danish and Norwegian Krone; Hungarian forint, Israeli shekel, Mexican peso, Polish zloty, Romanian leu, South African rand, Swedish krona, and Thai baht.

“Providing a solution to what will be a very challenging process for the FX market is where the Bloomberg Index team steps up to meet client needs,” says Colin Gallagher, BFix benchmark & currency indices product manager at Bloomberg Index Services. “With extensive use of BFIX in currency derivative products, accurate date alignment and a stable window environment for bank execution, BFix is now a well-established FX benchmark clients rely on globally and BFix T+1 is a natural evolution to our offering.”