It’s a new day for stocks and bonds investors in the USA – the T+2 settlement has come into effect!
In a significant move to improve trade settlement efficiency and reduce risks, the country’s premium securities clearing corporation is switching over to the T+2 settlement system with immediate effect. This reduces the settlement date by one full day.
The initiative comes in the wake of the same timeline procedure followed by trading houses in Europe, Australia and Hong Kong.
The T+2 timeline will soon arrive in the markets of Canada and Mexico too, it is reliably learnt.
The Depository Trust & Clearing Corporation (DTCC), USA, says that with the induction of T+2, the markets will witness reduced market and counterparty risks, increased financial stability and improved safety and efficiency for investors and market participants.
The reduced settlement cycle is expected to cut down the average daily capital requirements for clearing trades through DTCC’s National Securities Clearing Corporation by an estimated 25% which is equivalent to $1.36 billion.
The Head of Clearing Agency Services and Global Operations, DTCC, Murray Pozmanter, speaks out,: “The US move to a T+2 settlement cycle marks the most significant change to the market’s settlement cycle in over 20 years. A collaborative industry-driven effort with strong support from regulators, the T+2 initiative has achieved its common goal, which will ultimately further reduce risks and costs for the benefit of the investors and market participants.”
Obviously the securities markets the world over, is moving towards a more secure, less risky and of course, more transparent trading and settlement environment in the coming days.