March 14, 2022
Same-day settlement should be the goal of the marketplace. With the consolidation of shares through the DTCC, the entire rationale of delayed settlement has been eliminated. We no longer need to send checks between clearing houses by courier. We no longer need to wait for overnight wire transfers to move funds.
In fact, in 2022, any delay in receiving the proceeds of a sale transaction has the practical effect of making individual investors lenders to large market participants, who leverage proceeds not belonging to them for their own use during the delay period. In any other financial system we would consider this float to be a form of kiting, which has been illegal forever. Just because it happens under the guise of settlement does not render it less offensive.