As we continue to advance efforts to accelerate the US settlement cycle, I was pleased to read one of today’s Financial Times’ Lex opinion pieces, which expressed support for a move to T+1. For the past several months, we’ve been working closely with SIFMA 和 这里 on this initiative, 和 we’re making good progress on developing a blueprint for such a move. The good news is that we believe T+1 is achievable with the right amount of coordination, 社会化, 计划和测试.
A T+1 settlement cycle will significantly increase market efficiency 和 mitigate risk, particularly during times of extreme volatility, 和 would free liquidity—cash or shares—held to ensure the completion of trades. As the FT editorial notes, “the current system works well” 和 is the right approach for today’s marketplace.
The FT’s Lex opinion piece also highlights the significant challenges that real-time settlement would pose to the industry, including eliminating the benefits of netting for settling trades, the fact that every transaction would have to be funded instantly 和 individually 和 additional complexities for foreign investors, 选项, etf和期货. We outlined many of these same concerns earlier this week in a 信 对证券 & Exchange Commission (SEC) updating them on feedback we’ve received during workshops featuring buy-side, 卖方, 托管人, vendors 和 clearinghouses.
While accelerating settlement beyond T+1 is more aspirational at this time, we remain committed to exploring way to further reduce settlement times. 事实上, we already have the operational capability to clear 和 settle transactions same-day on T+0 with existing technology. More than one million same-day transactions are introduced 和 processed at our depository every day.
除了, we optimized our settlement system last year by re-engineering night-cycle processing, which has improved intraday settlement finality 和 delivered substantial savings through lower transaction costs. We did this using existing technology 和 without the need for our clients to undertake significant development work. It’s been a major win for the industry.
We’re also continuing to explore how technology may enable us to accelerate the settlement cycle even further while ensuring the same – or higher – levels of safety, stability 和 risk management. I encourage you to read about 项目离子 – our proof of concept of an alternative digital settlement service that leverages distributed ledger technology (DLT) to enable T+0 settlement while retaining the advantages of central netting 和 preventing fragmentation of the clearing 和 settlement ecosystem.
At the heart of all this work is our commitment to innovation. The combination of creative thinking 和 new technologies open the door to reimagining 帖子-trade processing 和 delivering greater value to the industry 和 the investing community.
This article originally appeared on LinkedIn脉冲