U.S. stocks are facing a historic moment! Moving towards the \”T+1\” settlement era, Wall Street is worried that something will happen

After the Memorial Day weekend holiday, the U.S. stock market will enter the \”T+1\” settlement era on Tuesday (28th). However, before the arrival of this landmark settlement mechanism change, many Wall Street institutions are a little uneasy…

The U.S. stock market will enter the \”T+1\” settlement era on Tuesday (28th) after the Memorial Day weekend holiday. However, many Wall Street institutions are a little uneasy before the arrival of this landmark settlement mechanism change… According to \”Peng \”Bo\” reported on Saturday that people familiar with the matter revealed that Jefferies Financial Group auctioned a bond of about US$3 billion last month in part to cover possible problems that may arise when the new settlement cycle rules are implemented.
However, Jefferies Financial Group said the bond sale was for general corporate purposes and declined to comment.
The U.S. Securities and Exchange Commission (SEC) announced in March this year that starting from May 28, the standard settlement cycle for U.S. stock trading will be shortened from \”T+2\” to \”T+1\”. You can receive the settlement cash within one working day.”
Currently, U.S. stocks are traded under \”T+0\” but the settlement cycle is \”T+2\”, which means that it will take two days for investors to get the money from selling stocks.
As technology plays an increasing role in the market, the SEC has been reducing the time required for settlement—from about five days in the 1990s to the current “T+2” settlement system.
Settlement failures are rare in modern markets and often result from technical issues or human error.
They can result in regulatory penalties, loss of transaction capital and even, in rare cases, the collapse of parties to a transaction when the transaction is large enough.
At present, many institutions are worried that the \”T+1\” system may increase the probability of settlement failure because the compressed time frame may be more error-prone.
Crucially, it makes it more difficult for buyers and sellers to ensure that funds and securities are ready.
Michele Pitts, global head of custody data at Citigroup Securities Services, said everyone is pulling out all the stops as settlement risks are likely to rise significantly in the first weeks of the new rules.
Société Générale, Citibank, HSBC, UBS Asset Management, Baillie Gifford and other institutions have said they are redeploying staff, reorganizing shifts or setting up new systems to prepare for the \”T+1\” settlement switch.
“There’s a lot of anxiety even just focusing on technology and how settlement is actually done,” Amy Hong, head of market structure and strategic partnerships in Goldman Sachs Group’s global banking and markets group, said this month.
There may be some mismatches in funds and we need to resolve some issues related to foreign exchange.
” Survey results conducted by research firm CoalitionGreenwich in April and May showed that only 9% of sell-side companies surveyed said they expected “T+1” settlement to go smoothly 38% sell-side companies warned buy-side managers that they were not prepared 28% companies believed that trading platforms Not quite ready Nearly one-fifth of companies believe there will be massive or serious issues facing huge disruption.

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