Hudson Depository Clearance Center announced this week that it is prepared to meet or exceed the reduced settlement cycle proposed by financial regulators worldwide.
Online PR News – 19-October-2012 – Providenciales – Interest in a shorter cycle increased after a European Commission reported in early 2011 the need for a consistent cycle in the EU. In the draft proposal, securities legislation would require a consistent T + 2 cycle across Europe. Most Europe-based markets settle on T+3, with the obvious exception being Germany, which settles on T+2.
Settlement cycles contrast in other markets and areas around the world. The settlement cycle was reduced from T+5 to the present T+3 in 1995 after improvements in computerization.
The industry twice looked at reducing the cycle again since then. Once in 2000 by the Securities Industry Association which was the precursor to the Securities Industry and Financial Markets Association. The Securities and Exchange Commission also tried four years later but subsequently decided that the required technology was not available to facilitate a shorter cycle.
The value of all U.S. equity and bond trades, which settle on T+3, averaged nearly $448 billion per day last year. Shortening the timeframe would reduce those costs and risks for financial institutions involved in trading including clearing houses and transfer agents.
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