Wall Street Returns to T+1 Stock Trading After a Century

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.

“There’s a lot of dependencies within the industry and there may be some rough patches with individual firms,” said Tom Price, managing director and head of technology, operations, and business continuity for Sifma. “But I’m encouraged that firms are staffing up. They’re making sure folks are not at the beach over the transition period but in the office.”It’s not the first time Wall Street has undergone such a transition, but industry pros say it will be the most challenging.

The cut to a single day is different because of the size and scale of the market today, the complexity of investment across borders, and the fact the US is leaving many other jurisdictions behind. Two big, immediate tests also loom for the T+1 system: First, Wednesday’s so-called double settlement day, where T+2 trades from Friday come due at the same time as Tuesday’s T+1 transactions. Then MSCI Inc.’s index rebalancing at the end of the week, when funds around the world tracking its gauges will be reshuffling holdings at the same time.

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