Starting from tomorrow, May 28th, the US SEC will require all broker-dealers and other market participants to settle trades on a T+1 basis
- Since 2017, the settlement cycle – the time between the transaction date and the settlement date – for most securities transactions has been two business days – often referred to as “T+2.” Under “T+2,” if you sold shares of ABC stock on Monday, the transaction would settle on Wednesday.
- T+1 settlement, also known as same-day settlement, refers to the process of settling trades on the same day they are executed, rather than the traditional T+2 (trade date plus two days) cycle.
- Market participants, including broker-dealers, clearinghouses, and custodians, will need to adapt to the new T+1 settlement cycle.
- means that trades will be settled and cleared on the same day they are made, reducing the time it takes for investors to access their funds and securities.
- This change aims to improve market efficiency, reduce risk, and provide better access to capital for investors