T+1 period begins on Wall Street

Wall Street is returning to the T+1 clearing period as of May 28 after approximately 100 years. Wall Street is entering a historical turning point. US markets are switching back to the T+1 clearing system as of May 28. Thus, the T+1 clearing system will be implemented in US markets again after 100 years. With the implementation of the rules of the US capital markets board, the Securities and Exchange Commission, transactions in stock markets will only take 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 clearings to take place. The stock of foreign investor securities in the US has exceeded $25 trillion. In addition, the fact that global funds will change the pace of transactions regarding their assets and that there will be less time to correct errors are among the main concerns. Last week, the SEC acknowledged that there could be a short-term increase in failed clearings and that a small portion of market participants may experience difficulties under the new rules. T+1 Command Center established The Securities Industry and Financial Markets Association (Sifma), which consists of representatives from the financial sector, established the T+1 Command Center to identify problems and coordinate solutions. Sifma General Manager Tom Price, who drew attention to the high degree of interdependence within the sector, noted that some firms may experience difficulties on an individual level, but that firms are preparing for the new rules with staff reinforcements. It is expected that the T+2 and new T+1 period swaps will overlap on Wednesday this week, which will cause some volatility. In addition, MSCI's index reviews on Friday also indicate potential volatility.