The T + 1 settlement cycle is accelerating
But before companies can get to work on making plans and allocating resources for the T + 1 change, the SEC needs to update its rules to green light the process.
“Businesses don’t want to spend the money, make the investment until they know for sure that the regulatory community is going to change the rules appropriately,” Mr. Price said. “In order to set budgets, to allocate staff, to ensure that the organization as a whole is engaged in this discussion, I think regulatory certainty and support is essential.”
To that end, the SEC’s Gensler asked SEC staff to draft a proposal for the consideration of the Commission on Shortening the Settlement Cycle.
At a virtual conference hosted by the Healthy Markets Association on December 9, Gensler was optimistic about moving to T + 1 and possibly T + 0, or same-day settlement.
“The technology exists today in 2021 to effect same-day settlement,” Gensler said. “Business models aren’t set up to do it that way, but there are things like affirmation of claim and allowances that could be… as soon as technologically possible on the same day.”
The industry report did not recommend moving to T + 0. “When you try to move things too far in advance, it takes away the possibility of fixing things,” Burns said, indicating that the number of failed transactions could increase in a T + 0 environment.
Mr Price added: “We have the deepest and most liquid markets in the world, we have a particularly advanced clearing and settlement system here in the United States, it is efficient, it works… so I think before we to embark on a journey to even consider (T + 0), you have to understand what the consequences are, you have to go into it with your eyes wide open. “
Mr Gensler said he also asked staff to review T + 0.
“I think there will be a future where we have same-day settlement,” Gensler said at the Healthy Markets Association conference. “How do you prepare the ground for the early 2020s to be able to get there later?” “