Wall Street is returning to the T+1 settlement period as of May 28, after nearly 100 years.
Wall Street is entering a historic turning point.
US markets are switching to the T+1 clearing system again as of May 28. Thus, after 100 years, the T+1 clearing system will be applied again in the US markets.
With the implementation of the rules of the Securities and Exchange Commission, the US capital markets board, transactions in the stock markets will take only one day.
The new rule, which aims to reduce risks in the financial system, also brings concerns. In particular, it raises questions about whether investors outside the US will be able to find enough dollars in a short time for the swaps to take place.
Foreign investor securities stock in the USA has exceeded 25 trillion dollars. In addition, the main concerns are that global funds will change their speed in transactions regarding their assets and that there will be less time to correct errors.
The SEC acknowledged last week that there may be a short-term increase in failed trades and that a small portion of market participants may experience difficulties under the new rules.
T+1 Command Center was established
Securities Industry and Financial Markets Association (Sifma), consisting of financial sector representatives, established the T+1 Command Center to identify problems and provide coordinated solutions.
Pointing out that there is a high degree of interdependence within the sector, Sifma General Manager Tom Price pointed out that some companies may experience difficulties at the individual level, but that companies are preparing for the new rules with personnel reinforcement.
It is expected that this week, on Wednesday, the T+2 and new T+1 period swaps will overlap, causing some volatility. Additionally, MSCI’s index revisions on Friday also point to potential volatility.