The London-based firm will make sure it has US dollars on hand before placing a buy order for US equities,. — Bloomberg
London: Jupiter Asset Management plans to cope with faster US equity settlement by purchasing US dollars in advance of trades, an example of the changes global money managers are having to make to limit the risk of failed transactions.
The London-based firm, which has £52.2bil in assets under management, will make sure it has US dollars on hand before placing a buy order for US equities, Mike Poole, the head of trading at Jupiter Asset Management, said in an interview. The company is also staffing two people on a new Treasury team to help manage its cash balances, he said.
Starting May 28, US stocks will settle in just one day – a system known as T+1. The shift will put equities out of sync with foreign-exchange markets, where trades typically take two days to complete.
That means investors who deal in currencies other than the US dollar are now rushing to figure out how to set up their operations, and make sure the cash that needs to change hands for a trade to settle arrives in time.
Some firms including Baillie Gifford are moving staff to New York, or extending working hours after the US stock market closes, even if this means buying US dollars in a notoriously illiquid time in the market. — Bloomberg
