Modern Infrastructure to Power T+1 Settlement
Against a backdrop of changes to market structure and operations, the importance of an upcoming move to T+1 stands out. This move faces the challenge of legacy and fragmented technology, entrenched manual processes, and siloed data — as well as capital markets that operate globally and across products.
Whether the SEC decides on a 2024 or 2025 implementation date, moving equities to T+1 settlement is gaining traction in the U.S. and other regions. Market participants of all stripes increasingly see the risk, capital, and cost reduction as outweighing the challenges of this transition.
In the U.S., the sell side (SIFMA) and the buy side (ICI) are leading the industry initiative to move to T+1 in conjunction with the DTCC. The recently published SIFMA playbook provides a wealth of detailed information on the move. The current plan, sparked in part by the meme stock mania of 2021, is a natural progression as markets modernize (i).
Keep reading on our blog:
www.clearstreet.io/insights/modern-infrastructure-to-power-t-1-settlement
i) SIFMA T+1 Securities Settlement Industry Playbook
ii) According to Advancing Together: Leading the Industry to Accelerated Settlement, published by the DTCC, risk model simulations have shown that the Volatility component of NSCC’s margin could potentially be reduced by 41% by moving to T+1
iii) Europe moved to T+2 in 2014, 3 years before the U.S. did in 2017.
iv) According to Securities Services Evolution, published by Citi Securities Services, 16% of institutional participants surveyed expect that the prevailing settlement timeframe for equities, in five years time, will be T+0.
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