As of May 28, 2024, investors will need to settle US equity transactions within a fraction of the time they currently do, after the US Securities and Exchange Commission (SEC) declared this the deadline for securities from the prevailing trade plus two-day (T+2) regime to move to a T+1 settlement schedule.
The move from SEC chair Gary Gensler comes in a bid to make markets safer for end investors following the snags some experienced during the Covid-19 pandemic’s meme stock frenzy. But it is also a major headache for investors outside the US, who must buy or sell dollars to trade US equities. They will have to figure out a way to synchronise currency and equity settlement schedules. This is a challenging task, because the shake-up in stocks leaves foreign exchange (FX) traders with barely any time to hedge and process trades.
