February 19, 2022
The current settlement periods in US equity markets is nothing short of a disgrace.
The biggest players in these markets are known to rent space next to exchange to benefit from literal milliseconds to front run trades in various exchanges and extracts pennies, hundreds of thousands and millions of times a day.
To expect these firms and their brokers to have a 2 day period (or 1, as proposed here) to settle these trades proves how far regulators are behind the ball in this technological age.
As denounced many, many times to the SEC in the past decades, the ancient rules and practices embedded in U.S equity markets allow for widespread rule cheating, fraud and manipulation to the detriment of regular and institutional investors (pension funds, IRAs, etc.). Combined with the widespread practice of FTDs, and SEC's proven inaction to rectify the matter (providing a list of the TARGETED companies - whose shares are FTDs - 2 WHOLE WEEKS after the FTD dates) is a literal slap in the face of anyone who wants to invest in a free market. ANY FTD trade should be immediately canceled and unwound, with money returned directly to the purchaser whose transaction failed, like in other equity markets around the world.
Anyway... to come back to the subject at hand, these inefficiencies should NOT be tolerated in the biggest equity market in the world in this day and age. Any transaction should settle by EOD, as these firms are more than capable to determine if a share can be located and settled in that amount of time. Anything else will allow for continued abuse of our markets to the detriment of investors.
This is a step in the right direction but unfortunately, it's about 15 years overdue. And implementing in 2 full years? That's just a joke.