Unsettling times: why is settlement risk on the rise?

Regulators and market participants searching for answers after BIS figures show substantial increase

Ever since Bank Herstatt left counterparties in the lurch in 1974 by going bust in the middle of a foreign exchange trade, having received Deutschmarks from counterparties but not paid out its US dollar legs, settlement risk has been recognised as one of the most important facing the FX market. 

But it’s a nebulous risk that has been tricky to measure: data did not exist to quantify the amount of it in the system, and banks were not required to track it.

So, when the Bank for International

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