NEW YORK (Reuters) – The Securities Industry and Financial Markets Association (SIFMA) on Wednesday welcomed the move to faster trade settlement, adding that it continued to monitor progress.
On Tuesday, U.S. trading of stocks, corporate bonds, municipal bonds and other securities moved from a two-day (T+2) to a one-day securities settlement cycle (T+1), following rule changes adopted by the Securities and Exchange Commission last February.
Settlement is the process of transferring securities or funds from one party to another after a trade has been agreed upon.
The changes in the world's largest financial market are aimed at making market infrastructure more resilient, but investors and regulators are wary of an increase in trade failures and other problems.
Wall Street will face its first big test on Wednesday as trades executed last Friday remain on T+2 and settle on Tuesday for the first day of T+1 trading, which is expected to boost trading volume.
Market participants expect transaction failures to increase as the industry adapts to faster settlement cycles. Research firm ValueExchange said that on average, market participants expect failure rates to increase from 2.9% to 4.1% after the implementation of T+1.
(Reporting by Carolina Mandle in New York; Editing by Rod Nickel)
