📊 How ‘T+1’ Stock Settlement Shift Is Impacting Markets
Bloomberg reports that modern technologies could allow settlements on the same day (T+0 or settlements in the evening), but this could lead to more "failed transactions" and fraud cases.
👍 Stock trades before the computer age involved the physical exchange of stock certificates, which often took five days or more. With the industry’s growth prospects threatened by a “paperwork crisis,” the New York Stock Exchange created a central clearinghouse that would hold the millions of certificates owned by its member firms. That set the stage for transactions to become computer-automated.
📝 The SEC said that a shorter settlement window means lower odds that the buyer or seller might default before the transaction is completed. That translates to lower margin requirements for the broker and a lower risk that high volumes or volatility will force a broker to restrict trades.
🤝 The halving of the time it takes to settle equity transactions puts US stocks out of step with the $7.5-trillion-dollar-a-day global currency market, where trades typically take two days to complete. Many overseas institutions trying to buy US assets now need to secure dollars in advance to ensure they have them in time to complete a transaction, or they rush the trade through, creating the risk of errors.
📎 How Creative Tactics by Junk Borrowers Are Forcing Creditors to Close Ranks
📎 Global Economic Risks Should Be Faced, Not Ignored
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© Экономическое обозрение
© Иқтисодий шарҳ
© Economic Review
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Bloomberg reports that modern technologies could allow settlements on the same day (T+0 or settlements in the evening), but this could lead to more "failed transactions" and fraud cases.
👍 Stock trades before the computer age involved the physical exchange of stock certificates, which often took five days or more. With the industry’s growth prospects threatened by a “paperwork crisis,” the New York Stock Exchange created a central clearinghouse that would hold the millions of certificates owned by its member firms. That set the stage for transactions to become computer-automated.
📝 The SEC said that a shorter settlement window means lower odds that the buyer or seller might default before the transaction is completed. That translates to lower margin requirements for the broker and a lower risk that high volumes or volatility will force a broker to restrict trades.
🤝 The halving of the time it takes to settle equity transactions puts US stocks out of step with the $7.5-trillion-dollar-a-day global currency market, where trades typically take two days to complete. Many overseas institutions trying to buy US assets now need to secure dollars in advance to ensure they have them in time to complete a transaction, or they rush the trade through, creating the risk of errors.
📎 How Creative Tactics by Junk Borrowers Are Forcing Creditors to Close Ranks
📎 Global Economic Risks Should Be Faced, Not Ignored
Read full:
⬇️⬇️⬇️
en review.uz/en/6pd
ru review.uz/6pd
More analytics
⬇️⬇️⬇️
© Экономическое обозрение
© Иқтисодий шарҳ
© Economic Review
telegram | facebook | twitter|linkedin