About the Effort
“We believe the opportunity exists to accelerate the settlement cycle and optimize the process further, to T+1, T+1/2 or someday, even netted T+0, in which trades are netted and settled at the end of the same trading day.”
- Murray Pozmanter
DTCC Managing Director and Head of Clearing Agency Services and Global Operations
Shortening the standard equities settlement cycle to T+1 will yield significant benefits for the industry and market participants including reduced credit and counterparty risk, operational process improvements, increased market liquidity, and lower collateral and margin requirements.
Like the move to T+2 in 2017, this industry-wide, multi-year initiative to shorten the settlement cycle further is not driven by regulatory mandate but rather led and coordinated by market participants, demonstrating the industry's ongoing commitment to continual improvements in the shared operation of our capital markets.
Accelerating settlement requires careful consideration and a balanced approach so that settlement can be achieved as close to the trade as possible without creating capital inefficiencies and introducing new, unintended market risks, such as eliminating the enormous benefits and cost savings of multilateral netting.
DTCC’s white paper, Advancing Together: Leading the Industry to Accelerated Settlement outlines a two-year industry roadmap for shortening the settlement cycle for U.S. equities to T+1, one business day after the trade is executed.
We welcome comments and questions. Please submit your questions to settlement_optimization@dtcc.com.