DTCC Proposes Method For Shortening U.S. Settlement Cycle

DTCC proposed a method for shortening the U.S. trade settlement cycle from two business days ("T+2") to one business day ("T+1").

In a white paper, DTCC stated that industry participants would benefit from substantial risk reduction as a result of the move to T+1, particularly during times of market stress and volatility. In order to achieve T+1 within two years, DTCC proposed that:

• by Q1 2021, distributed ledger technology ("DLT") prototype development on a digital platform should be completed;
• by Q2 2022, DTCC would begin shifting to an "enhanced settlement model," which better integrates processes from its equities clearing and settlement subsidiaries; and
• by 2023, the U.S. settlement cycle, with alignment between market participants and regulators, should be officially moved to T+1.