Earlier this year, we wrote about the
GameStop saga of late 2020/early 2021 and its
impact on U.S. capital markets. That drama led to scrutiny of
the nation's system for settling and clearing stock trades.
Now, the SEC is proposing a rule that could dramatically
improve this system.
Currently, stock trades are cleared and settled over a period of
up to 2 days ("T+2"). So, when a customer buys (or sells)
a stock, they generally won't own the stock (or receive payment
for the sale of stock) until almost 2 days later. Since a trade may
fall apart during this 2-day settlement period (e.g. if a short
seller cannot afford to cover their position in that time), the
country's only clearinghouse (the National Securities Clearing
Corporation) insures parties against the risk of a failed trade. To
protect itself from this risk exposure, the NSCC requires its
member clearing firms to meet margin calls that increase based on
trading volatility. It was the NSCC's margin calls
