Wall Street Adopts T+1 Settlement for Faster, Safer Trading

The U.S. will transition to a T+1 settlement system on May 28, 2024, replacing the T+2 system. This change aims to reduce counterparty risk and improve market liquidity by settling trades one business day after the trade date. While the shift promises benefits like enhanced capital efficiency and reduced risk, it also presents challenges such as increased operational pressures and initial costs estimated at $30 billion. The move is seen as a response to issues highlighted during the 2021 meme stock frenzy.