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Globe/wire say SEC told foreigners might not like T+1

2024-05-22 09:12 ET - In the News

See In the News (C-*SEC) U S Securities and Exchange Commission

The Globe and Mail reports in its Wednesday edition that participants in the United States' multitrillion-dollar securities markets face an early test of their ability to cope with regulatory reforms to speed up trade settlement, as a major index rebalance scheduled to occur just days after the planned switch risks causing a spike in failed trades. A Reuters dispatch to The Globe says that starting May 28, U.S. stocks and corporate bonds must settle one business day after trading instead of two. Markets in Canada and Mexico are also adopting the reforms, which have been designed to reduce counterparty risk and improve market liquidity. However, just three days after this new standard -- known as T+1 -- takes effect, MSCI global indexes will rebalance in a quarterly event, leaving some participants concerned that one of the largest trading days of the year could strain markets adjusting to the new regime. The rebalance means funds must readjust their holdings to keep their mandates tracking the index. The U.S. Securities and Exchange Commission said faster settlement will make markets more efficient, but foreign investors will have less time to recall their U.S. securities and gather the dollars necessary to trade.

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