Move to faster stock settlement creates unique hurdles for ETF market | Hellenic Shipping News Worldwide hellenicshippingnews.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from hellenicshippingnews.com Daily Mail and Mail on Sunday newspapers.
The move to next-day settlement for trading in U.S. securities on Tuesday will require exchange-traded funds (ETFs) and the marketmakers to juggle multiple jurisdictional requirements and capital needs, market participants said. U.S. trading moves to a shorter settlement on Tuesday, which regulators hope will reduce risk and improve efficiency in the world's largest markets, but is expected to temporarily increase transaction failure for investors. The biggest headache that many ETF issuers and their service providers face is what happens when there's a "mismatch" between when trades of the ETF wrapper the fund itself settle, and the settlement schedule for the ETF's holdings traded outside of the United States.
The U.S. market's transition to next-day (T+1) settlement for trading in securities aims to reduce risks and enhance efficiency. However, this change presents challenges for ETF issuers, marketmakers, and asset managers, particularly regarding mismatches in settlement schedules across different jurisdictions. The industry is preparing to adapt with additional collateral and liquidity management strategies.
Move to Faster Stock Settlement Creates Unique Hurdles for ETF Market usnews.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from usnews.com Daily Mail and Mail on Sunday newspapers.
A new rule called T+1 settlement is speeding up how fast buy and sell trades will be settled to one day. While the regulation is designed to make markets more efficient, it may create some challenges for financial firms.