On February 15, 2023, the Securities and Exchange Commission (SEC) adopted a rule to shorten the standard settlement cycle for most routine securities trades from two business days after the trade date (T+2) to one business day after the trade date (T+1). (i) The proposed May 2024 deadline has lit a fire under market participants, who must move quickly to prepare for the change.

The settlement cycle is not shortening in a vacuum. Against a backdrop of changes to market structure and operations, the importance and the preparation required for the move to T+1 stands out. Challenges will include legacy and fragmented technology, entrenched manual processes, and siloed data — all impacting capital markets that operate globally and across products.

Market participants across the industry will need to work hand in hand to prepare for the change. Clear Street is proactively preparing for T+1 for all its internal operations and assisting its clients in their effort to ensure a smooth transition. This whitepaper summarizes considerations for market participants, specifically hedge funds and asset managers, as we approach a shorter settlement cycle.