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Executive Summary

The aftermath of the 2008 financial crisis and more recent industry problems have brought into greater focus the risks and inefficiencies in post-trade processes, a portion of which may relate to the length of the settlement cycle. Since 1995, the settlement cycle has remained at trade date plus three business days (“T+3”) for U.S. equities, corporate bonds and municipal bonds, despite significant improvements in post-trade processes and underlying technology over the same period.

Accordingly, in May 2012, The Depository Trust & Clearing Corporation (DTCC) commissioned an independent study to examine and evaluate the necessary investments and resulting benefits associated with a shortened settlement cycle (SSC) for US equities, corporate and municipal bonds.

The purpose of this study was to examine three of the industry’s critical areas of concern: reducing risk; optimizing capital; and reducing costs by streamlining processes. To ensure the independence of the study’s findings, DTCC selected The Boston Consulting Group (BCG) to lead the analysis. The Securities Industry and Financial Markets Association (SIFMA) provided an advisory role on the project and helped assemble a Steering Committee to advise on the project.

As BCG was asked only to share research findings so that the industry could determine to accelerate the settlement time period or remain at T+3, there is no recommendation contained in this report.

Download the White Paper: Cost Benefit Analysis of Shortening the Settlement Cycle