In a move designed to boost efficiency and reduce risks, starting today, US stock and bond trades begin settling in two, rather than three, days.
Canadian stocks and bonds, as well as Mexican equities are also shifting to T+2, moving into line with Europe, Australia and Hong Kong.
The Depository Trust & Clearing Corporation (DTCC) says that T+2 offers reduced market and counterparty risk, increased financial stability and improved safety and efficiency for investors and market participants.
The lower levels of risk associated with a shorter settlement cycle are expected to reduce the average daily capital requirements for clearing trades through DTCC's National Securities Clearing Corporation by approximately 25%, or $1.36 billion.
Murray Pozmanter, head, clearing agency services and global operations and client services, DTCC, says: "The US move to a T+2 settlement cycle marks the most significant change to the market’s settlement cycle in over 20 years.
"A collaborative industry-driven effort with strong support from regulators, the T+2 initiative has achieved its common goal, which will ultimately further reduce risks and costs for the benefit of the investors and market participants."