Wall Street Moves to T+1 Settlement Cycle for Stock Trades Starting May 28, 2024

May 28, 2024, 10:35 AM

The U.S. Securities and Exchange Commission (SEC) has mandated a significant change in the settlement cycle for stock trades, moving from a T+2 to a T+1 cycle starting May 28, 2024. This change means that trades will now be settled in one business day instead of two, marking the fastest settlement cycle in a century. The transition aims to reduce risk and improve efficiency in the U.S. securities markets. While the average investor may not notice significant differences, the new cycle requires faster securities and payment processing, which could present unique challenges for entities like exchange-traded funds (ETFs) and market participants. The move is part of a broader effort to modernize market infrastructure and enhance the efficiency of Wall Street. The SEC adopted this rule in February 2023, and events like the GameStop mania underscored the need for faster transactions.