The T+1 Countdown: Adapting to the SEC’s Settlement Change
Last year, the SEC announced it would be reforming the T+2 rule to a shortened T+1 time frame. While the May 28, 2024 implementation date seemed far off, the new "one business day" rule for trade settlement will take effect next week for both buyers and sellers. What companies should know:
Trading: With the updated rule, experts have predicted a rise in failed trades, operational glitches and a significant uptick in settlement risks for the first several weeks - so if volumes are down, don’t panic.
Liquidity: T+1 may improve domestic liquidity as cash in the market will be recycled faster. That said, the update also means that firms will need to be able to quickly assess their liquidity position throughout the day.
Corporate Transaction Complications: The settlement change will significantly complicate cross-currency transactions with the reduced time frame to complete each transaction. The new settlement rule will demand more precise planning, especially on the part of FX trades.
Interested in starting a conversation? Reach out to Graham Farrell (Graham.Farrell@Harbor-Access.com) [in Canada] or Jonathan Paterson (Jonathan.Paterson@Harbor-Access.com) [in the US] to start a conversation.
