The US financial markets are planning a significant acceleration in the processing of stock market transactions: according to the Handelsblatt newspaper, starting next Tuesday the so-called settlement (industry term “settlement”) of securities will only take one day instead of two. . “Liquidation” is, among other things, the process by which securities and money eventually change hands. The reform is known as “T+1”. According to the report, the reform has the potential to increase efficiency for investors. In addition, the risk of defaults will be reduced in the future.
Critics fear local financial services providers are overwhelmed
However, the change also caused discomfort among some insiders. In Europe, in particular, financial service providers are preparing to face increased demands on settlement and risk management systems.
According to Handelsblatt, the European Fund and Asset Management Association (Efama) warns of potential challenges for European asset managers, who could have limited access to the settlement system for global securities transactions due to shorter settlement times in USA and time differences. “The fact that between $50 billion and $70 billion in the world's major currencies are at risk on normal trading days should raise significant concerns,” Efama underlines in the report.
Europe will probably have to do the same
Similar adaptations on the European market are inevitable, according to consultant Hans-Joachim Lefeld of the consulting firm LPA. Lefeld predicts that Europe will also have to introduce “T+1.”
The largest stock exchanges in the world in terms of trading volume are the New York Stock Exchange and the American technology exchange Nasdaq. According to figures from Statista, sales amounted to 26.4 and 23.7 billion dollars in 2023. This is followed by Chinese shopping centers. The Deutsche Börse in Frankfurt am Main recorded commercial transactions worth 1.11 trillion dollars (just over one trillion euros) in 2023.