Introduce Numbers Settlement For Free

On February 15, 2023, the Securities and Exchange Commission (the "Commission") adopted a rule amendment to shorten the standard settlement cycle for most routine securities trades from two business days after the trade date to one business day after the trade date (or from "T+2" to "T+1" in common parlance).

The T+1 settlement cycle means that trade-related settlements will happen within 24 hours of the completion of a transaction. With T+1 settlement, the shorter trade cycle is expected to be good for investors, and it will encourage trust among them.

A settlement occurs when the plaintiff and defendant agree that the defendant pays a certain amount in return for the plaintiff dropping the lawsuit. Once a settlement has been reached, the two sides do not proceed to trial. Sometimes an insurance company will make the payment and not an individual defendant.

Settlement amounts are typically calculated by considering various economic damages such as medical expenses, lost wages, and out of pocket expenses from the injury. However non-economic factors should also play a significant role. Non-economic factors might include pain and suffering and loss of quality of life.

Operational risk will increase, since they have a shorter window to resolve any breaks or exceptions. Non-harmonised settlement cycles across different markets could exacerbate overnight funding requirements as well, for example if an investor is waiting for cash from one market to pay for securities in another.

The T+1 settlement cycle means that trade-related settlements must be done within a day, or 24 hours, of the completion of a transaction. For example, under T+1, if a customer bought shares on Wednesday, they would be credited to the customer's demat account on Thursday.

While the stock market securities now adhere to T+1 cycle, the same transaction takes one day longer in case of mutual fund units. Earlier it used to take a minimum of three days, but with effect from February 1, the settlement cycle was cut down by one day. This means now it will take T+2 for the transaction to close.