WHY NOT T+0?
In a recent Blog Post, Ken Bentsen Jr., President and CEO of the U.S. Securities Industry & Financial Markets Association (SIFMA), articulates the many compelling reasons why the U.S. opted not to accelerate settlement even further to T+0. The short answer, according to Mr. Bentsen, is that T+0 would not provide added benefits while adding further risks. For example, given the industry’s reliance on current business, infrastructure, and operational processes, the risk of increased ‘fails’ would be heighted in an environment where trades had to settle same day. There would be only a matter of hours to complete necessary tasks (such as trade affirmations, allocations, corrections, etc.) and troubleshoot issues. This risk would be magnified during periods of high market volatility. Securities netting, lending and funding are examples of other areas cited by Mr. Bentsen as potentially being adversely impacted in a T+0 environment.
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