Wall Street Moves To Fastest Settlement of Trades in a Century (yahoo.com) 31
The US stock market is finally as fast as it was about a hundred years ago. Bloomberg News: That was the last time share trades in New York settled in a single day, as they will from Tuesday under new Securities and Exchange Commission rules. The change, halving the time it takes to complete every transaction, also occurred in jurisdictions including Canada and Mexico on Monday. The switch to the system known as T+1 -- abandoned in the earlier era as volumes became unwieldy -- is ultimately intended to reduce risk in the financial system. Yet there are worries about potential teething issues, including that international investors may struggle to source dollars on time, global funds will move at different speeds to their assets, and everyone will have less time to fix errors.
The hope is that everything will run smoothly, but even the SEC said last week the transition may lead to a "short-term uptick in settlement fails and challenges to a small segment of market participants." The finance world's main industry group, the Securities Industry and Financial Markets Association, has instigated what it calls the T+1 Command Center to identify problems and coordinate a response. Firms across the spectrum have been preparing for months, relocating staff, adjusting shifts and overhauling workflows, and many say they're confident in their own readiness. The worry is whether every other counterparty and intermediary is similarly organized.
The hope is that everything will run smoothly, but even the SEC said last week the transition may lead to a "short-term uptick in settlement fails and challenges to a small segment of market participants." The finance world's main industry group, the Securities Industry and Financial Markets Association, has instigated what it calls the T+1 Command Center to identify problems and coordinate a response. Firms across the spectrum have been preparing for months, relocating staff, adjusting shifts and overhauling workflows, and many say they're confident in their own readiness. The worry is whether every other counterparty and intermediary is similarly organized.
Decoder Ring (Score:5, Informative)
Here's what this means if you don't understand the language.
When you buy or sell a stock, it's called an order. It's basically a contract to buy or sell. Money and stock doesn't actually change hands at that second, the orders are reconciled at the end of the trading session. It's up to the buyer to make sure they have enough money to cover the buy, and the seller has to make sure they have enough stock to sell to cover their trade. If either of those conditions aren't met, that's how a trade fails. Sometimes the stock exchange will step in and make it right, depending on a whole slew of rules and regulations.
Anyways, the old-school method of reconciliation involved floors of accountants churning through buy and sell, or put, orders. When it was done by hand, crunching through an entire day's transactions was feasible. Now that computers are doing thousands of transactions a minute, even with computers handling all the reconciliation, that processing time has stretched out. This is an attempt to fix the extended reconciliation time.
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still cant manage t0 tho ffs
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It's worse than that. An order is an offer, and the other party doesn't have to agree to the offer.
Re: Decoder Ring (Score:2)
Reasons (Score:2)
There are a few good reasons to delay reconciliation, mainly having to do with bugs, errors and scams. It's much easier to unwind trades done in error, or fraudulently, when no stock or money has changed hands. Part of the reconciliation process is double checking that everything is kosher before millions of dollars starts changing hands.
Remember a few years ago when a computer bug crashed one of the markets? Nobody lost a penny, because they rewound all the transactions and continued on the next day as if
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Actually, according to Investopedia, you have this exactly backwards: when the number of total shares traded was low, same day (T+0) or next day (T+1) were the norm. This changed around the time of the 1929 crash, maybe because of it. In fact, until recently the settlement time was a whopping T+5 (next week for most transactions)! This was changed to 3, then 2, and now 1 again BECAUSE of advancing tech, not in spite of it.
According to the various articles I just read (because this is news to me too, I had n
Why is it called T+1 (Score:2)
In 2024, why is the market only open 9:30-4pm ET? (Score:2)
Given the computerization of the NYSE why is it not open 24/7 or at least 8am-8pm(5pm PT)?
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What if we lowly traders need some time off to think of something besides stupid markets that we are just doing to try to make a living, but it really eats away at our soul so we need at least some time away otherwise we'll go crazy?
Re:In 2024, why is the market only open 9:30-4pm E (Score:4, Funny)
What if we lowly traders need some time off to think of something besides stupid markets that we are just doing to try to make a living, but it really eats away at our soul so we need at least some time away otherwise we'll go crazy?
Careful. Us coders made the mistake of mentioning self-care as a reason to not be plugged in 24/7. The tech companies have been obsessed with replacing us with machines ever since. They'll find a way to replace you too.
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Why can't they just give us all a high basic income, right?
Why is income even a thing anymore? Seriously. We decided a long time ago that wealth belongs in the hands of the few. Why keep playing around with the pennies off the rounding errors for the elite? Just have them feed us in a trough like the cattle we are, and be done with it.
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Volume would be too low at times of the day to make pricing reliable.
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There are extended sessions, the market is open effectively from 7am-8pm: https://www.nyse.com/markets/h... [nyse.com] (ctrl+f "late trading session")
Why not longer? Effectively exchanges, brokerages, and anyone involved in trading would need staff 24/7. Its been awhile since I was out of the direct electronic trading world, but no firms I saw had an ability to do zero-downtime deploys, so you needed maintenance windows. I myself had a little "oops" when I was doing an upgrade on a trading engine right after FB announ
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Because you need a time to report things like earnings and other things - i.e., dissemination of information to the public.
Having the markets open 24/7 gives an advantage to those who can access that information the quickest - if you can beat the next guy to reacting to the earnings release, you can make a few bucks by buying or selling ahead of the other guys.
Instead, those things are generally released after markets close - so everyone gets the information when they get it, they get time to digest it, and
good for margin interest charged by brokers (Score:2)
One of the likely effects of this is that buyers will not have enough time to move money around to cover their buy orders, and consequently the broker will execute the buy using the buyer's margin power, for which the broker charges interest on top of any commission.
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Did you just say time is money?
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The biggest issue for me is tax lot selection has to be done next day. Brokers already treat the money as debited or credited once the transaction completes, with a few minor exceptions like expired options.
Re: good for margin interest charged by brokers (Score:2)
Forget day trading completely (Score:2)
Servers running arbitrage programs have been toasting you for years, now imagining you can day trade is a joke.
What is the pupose of a seat on the floor? (Score:1)
Re: What is the pupose of a seat on the floor? (Score:2)
yet somehow banks still require a 10 day hold (Score:2)
Anyone find it not even slightly remarkable that in a world where the vast quantity of stock market transactions can now clear in a day, your bank still wants to put a 10 day hold on a cashier's check purchased from the same branch against another account at the same branch - I know because this happened to me less than a month ago when opening a new joint account by moving money from a 30 year old account. They put a 10 day hold on the deposit into the new account.