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Preparing for Shortened Settlement Cycles Beyond T+2

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Abstract

In 2017, the U.S. and Canada will be breaking their 20-year T+3 settlement cycle in what will be the greatest reform since 1995’s migration from T+5 to T+3. The move to T+2 settlement is intended to harmonize with global markets already on a T+2 settlement cycle, reduce risk and exposure, enhance market liquidity, and increase efficiencies. Both countries will be moving approximately 100 products in scope across equities, corporate & municipal bonds, and unit investment trusts (UIT) to a T+2 settlement in the third quarter of 2017. These products combined account for approximately U.S.$950 billion in daily clearing. To prepare for T+2, the Depository Trust & Clearing Corporation (DTCC) is planning to conduct industry testing in Q1-2017 ahead of the proposed go-live date of September 5, 2017.

Suggested Citation

  • Halliwell, Steven & Martinen, Michael & Simmons, Julia, 2016. "Preparing for Shortened Settlement Cycles Beyond T+2," Journal of Financial Transformation, Capco Institute, vol. 44, pages 13-16.
    • Handle: RePEc:ris:jofitr:1582
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    Keywords

    Institutions: Design; Formation; Operations; and Impact; Cost; Capital; Capital; Total Factor; and Multifactor Productivity; Capacity; Expectations; Speculations; Banks; Depository Institutions; Micro Finance Institutions; Mortgages; Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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