It has been more than 50 years since a small German bank collapsed partway through a Wednesday afternoon, leaving counterparties who paid Deutsche marks to Frankfurt waiting for US dollars that never reached New York. The bank – Herstatt – lives on in the name given to this kind of settlement risk, the gap between one side of a trade being paid while the other remains undelivered.

The gap has narrowed but not closed. Every day, trillions of dollars of securities, repos, foreign exchange and