.Wall Street counts down to T+1

Wall Street is preparing to shorten the time period for money held in stocks to be transferred into an account as of May 28. While the transfer to an account used to occur two days after a transaction (T+2), it will now occur one day later (T+1). This shortening of the time period is expected to have implications not just for the US, but also for the wider world, given the dominance of US stocks in global indices. Every aspect of the market structure, including funding, liquidity, securities lending, forex and exchange-traded funds, could be affected by this process. According to estimates by Bloomberg Intelligence, this transition could cost investors $31 billion annually. “Every aspect of the market structure will be reshaped by this evolution,” economists Nicholas Phillips and Larry R. Tabb said in an assessment. The SEC, the US’s securities regulator, said a shorter settlement window means there is a lower chance of a buyer or seller defaulting before the transaction is completed. This also means lower margin requirements for the broker. Settlement for US Treasuries currently occurs on T+1.