February 19, 2022
As a retail investor, shortening the securities transaction settlement cycle would bring some immediate benefits. First, I would be able to move my funds and securities between brokers more quickly, especially in the event of attempting to direct register shares in my name. Secondly, as I have heard described by lectures given by Gary Gentler when he was a professor at MIT and various other reputable sources of financial news (e.g. WSJ), T+2 introduces risk to our financial system. I was a retail investor unable to trade on January 28, 2021. Shortening the settlement cycle would be a step towards ensuring risk is properly managed by custodial firms in the market.
Additionally, as a director of technology, I understand that the technology exists to do T+0 settlement, and yet custodial incumbents are arguing against anything shorter than T+2.
Do custodial incumbents realize that their custodial services will quickly become obsolete as technology progresses? The only tool they have to fight this is regulatory capture and obfuscation of the public debate.