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April 24, 2014

Settlement time for U.S. trades closer to being shortened

“The Depository Trust & Clearing Corporation, which processes all U.S. stock and fixed income trades, said on Wednesday it supports shortening the settlement cycle for U.S. equities, corporate and municipal bonds, and unit investment trust trades.

“The settlement cycle, which refers to the time between when a trade is made and the time that the buyer must make the payment and the seller must deliver the security, would be shortened two business days after the day of the trade (T+2) from the current three business days after the trade (T+3).

“The idea gained steam during the 2008-2009 global financial crisis as a way for firms to limit the risk associated with the person or firm on the other side of a trade defaulting.

“This is a very significant step in making the industry safer and more reliable,” Patrick Kirby, chief operations officer of J.P. Morgan’s (JPM.N) corporate and investment bank operations, said in a statement.

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Read full Reuters article here.

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