Settlement risk higher amid flows into new currencies – Baton - Baton Systems
Settlement Risk in Emerging Markets
The article discusses the increase in settlement risk due to the growth of trading in new currencies, particularly in emerging markets. Settlement risk refers to the risk that one party in a transaction fails to fulfill their obligation, leading to financial loss for the other party.
Importance of Effective Settlement Systems
The article highlights the importance of effective settlement systems, particularly the use of baton systems, which enable the simultaneous exchange of currency and securities, thereby reducing settlement risk.
Vigilance in Mitigating Risks
The article also emphasizes the need for market participants to remain vigilant and take necessary precautions to mitigate settlement risk.