Years of effort on Wall Street to accelerate trade will be tested this week.
Starting Tuesday, stock and other security trades must be finalised by the end of the next business day.
Settlement refers to the exchange of money for a security. This so-called “T+1 settlement” speeds up the previous process, which allowed for two business days.
The move is the latest progression in making Wall Street’s infrastructure appear more like the front end, which is increasingly shifting towards trading apps and round-the-clock markets.
“Shortening the settlement cycle will allow regular investors who sell their stock on a Monday to receive their money on Tuesday.
Shortening the settlement cycle will also benefit the markets because time equals money and risk.
On May 21, Securities and Exchange Commission Chair Gary Gensler stated that it will make our market infrastructure more resilient, timely, and orderly.
Source (CNBC)
