Latest / The Trading Floor with David Axtell
Settlement Risk and CLS – The Infrastructure of Trust
You execute a trade. Both sides agree on the price. The deal is done. But is it really?In Episode 8, David Axtell explains what happens after the handshake — and why the gap between agreeing a trade and actually settling it has been one of the most dangerous moments in financial markets for over fifty years.It starts with Bankhaus Herstatt. June 26, 1974. A small German bank that collapsed mid-settlement, after counterparties had already delivered Deutschmarks but before Herstatt paid out the dollars. Banks around the world were left holding nothing. The fallout gave settlement risk its other…
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