The Countdown to T+1 Settle – Themes & Questions

By Jeffrey O’Connor, Head of Market Structure, Americas, at Liquidnet

On May 28, 2024, US equity trades will settle the next day. With under a year to go, it’s a good time to check in on some of the themes and operational changes that will need to occur. Importantly, the onus will not just be on the broker/dealer community to comply – as with the SEC’s Market Structure Proposal Changes – but a whole host of market participants will need to exercise implementation and testing to processes prior to the go-live.

We were provided with significant exposure in 2021 with regards to settlement and how it relates to margin, operational, and counterparty risk — which was front and center as the new SEC regime took hold. Different than the aforementioned Market Structure Proposals, this initiative seems to have broad support. Organizations such as The Securities and Financial Markets Association (SIFMA), The Investment Company Institute (ICI), and the Depository Trust and Clearing Corporation (DTCC) are all working together to forge the path forward from a two- to one-day settle.

Remember, we’ve all adjusted to shortened settles in the past, most recently from T+3 to T+2 in 2017, so there’s no reason to think this can’t go smoothly. As previously mentioned, industry support is there as a more efficient market can be attained while reducing operational cost and counterparty risk.

One question to keep in mind, however, is: Why would we stop at T+1?

Doesn’t the obvious goal of T+0 equate to the least amount of systemic risk within the system, i.e., if you have the money: buy it, if you don’t: don’t. The operational adjustments will be made — and have been before — but it is a major jump through hoops to align processes, systems, etc. to comply with the new timeframe — Will the final requirement come again a couple of years down the road? It seems possible if the most complete transparency of monies is the goal.

There are some operational specifics below but something not mentioned in the business media, although worth consideration, is impact to the swaps market — where the goal is to have the broker/dealer carry the risk to execute on a strategy. From a fund management perspective, the risk with brokers will certainly be reduced, possibly denting what is a currently sizable market.

See the Liquidnet summary below for some of the key components at play here but some clearing questions remain unsettled in the meantime:

    • Complications of settlement rises significantly for international traders. Typically, international accounts don’t allocate until T+1 — delaying allocations, matching, and getting set up.
      • Do operations get moved from the executing region to local? If they allocate 2am local, are they waiting until 8am EST for allocation execution?
      • Is moving clients to central trade matching (CTM) the immediate goal for broker/dealers? Will there be a move to FIX allocations via Tag 1?
      • Does every client need an omnibus account?

Liquidnet T+1 Settlement Summary

Expected Go Live

  • May 28, 2024 (Approved by SEC)

Benefits of T+1 Settlement

  • Increase efficacy in the industry
  • Mitigate market and settlement risks
  • Reduce margin requirements
  • Free up capital

Expectations of Industry Partners/Participants

  • Review and enhance operational processes
  • Aim for STP/real-time processing of allocations/settlements
    • Liquidnet will look to leverage FIX/CTM for allocations
    • Manual adjustments on Trade Date
  • Leverage international team to ensure industry deadlines are met

Key Processing Changes

  • All industry processing deadlines moved up by approximately 24hrs
  • DTCC/NSCC will consume record later to T
  • Affirmation/disaffirmation moved for 5:00pm T+1 to 9:00pm on T
  • Transactions will need to be approved on RAD prior to the stat of the proposed 11:30pm ET
  • CNS buy-ins will remain 48hrs/two (2) business days
  • Additional key changes can be found via below links

Testing Specifications

  • High level documents and environment available Q4 2022

As a firm, Liquidnet is working with the industry to ensure our process and procedures are up-to-date and ready for the change.

About Liquidnet

Liquidnet is a leading technology-driven, agency execution specialist that intelligently connects the world’s investors to the world’s investments. Since our founding in 1999, our network has grown to include more than 1,000 institutional investors that collectively manage $33 trillion in equity and fixed income assets. Our network spans 46 markets across six continents. We built Liquidnet to make global capital markets more efficient and continue to do so by adding additional participants, enabling trusted access to trading and investment opportunities, and delivering the actionable intelligence and insight that our customers need. For more information, visit and follow us on Twitter @Liquidnet.









The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

Read this next


Fed Policymakers Navigate a Delicate Path Amidst Inflation and National Debt Concerns

The Federal Reserve’s monetary policy has been a subject of debate in Western markets, especially regarding its approach to interest rates.

Institutional FX

PhillipCapital extends trade surveillance partnership with Eventus

“PhillipCapital has seen first-hand how Validus can scale to meet any capacity requirements as clients grow, as well as our team’s expertise in not only our customizable technology but the market and regulatory challenges facing the industry.”

Market News

Why Yellow Metal Prices are Plummeting

Gold prices have been steadily declining after failing to surpass the resistance zone at $1,650. The current price is at its lowest point in seven months. Strong economic data from the US has triggered a meltdown in the gold market.

Industry News

Nuvei enters China following licenses in Australia, Singapore, and Hong Kong

The expansion into China represents more than just a geographic milestone for Nuvei. It also adds an essential component to the company’s comprehensive suite of alternative payment methods (APMs), which currently counts 634 different options. These APMs play a crucial role in catering to local market preferences, thereby enhancing Nuvei’s value proposition for businesses looking to penetrate new markets within the APAC region.

Institutional FX

LiquidityBook launches LBX PMS 2.0 after acquiring Messer

With this rollout, LiquidityBook aims to meet the diverse requirements of its clientele, ranging from startup hedge funds and asset managers to broker-dealers and outsourced trading desks.

Institutional FX

Celoxica enters Australia to offer low latency market data and execution services in APAC

“There is a significant opportunity to deliver fast and efficient market access to APAC financial market participants, including trading firms, brokers, exchanges, and service providers. I am eager to extend our reach in this crucial market.”

Institutional FX

Cboe to launch four new Credit Volatility Indices (Credit VIX)

“The Credit VIX Indices are expected to provide new clear signals on bond market sentiment, and act as a new barometer of corporate credit risk in North America and Europe.”

Executive Moves

TradeZero hires Leo Ciccone as Chief Compliance Officer (CCO) for TradeZero Canada

“Leo brings to TradeZero broad and comprehensive experience coupled with deep business and regulatory relationships that will assist us in ensuring we meet and exceed industry best practices and to further our growth initiatives going forward,”

Institutional FX

Apex launches fractional fixed income trading for retail investors

“The ability for people – and not just high net-worth investors – to easily add fixed-income and diversify their portfolios is a game-changer.”