Professor Anthony Gandy, Professor Daniel Broby, Gary Wright, Tony Freeman, Professor Mark Durkin
SWIFT Institute (May 2023), 21 pages
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This paper, published 30 May 2023, discusses the progress made towards T+1 and instantaneous settlement in financial markets, and industry preparedness for such a change. We cover the various equity settlement technologies and analyse how collateral, stock lending and margin requirements can impact the settlement processes. The debate on shortening the equity settlement cycle is discussed, along with potential policy recommendations based on industry preparedness. The paper draws on 44 unstructured interviews and two focus group workshops with key stakeholders in the financial industry. This sample represents firms with total assets in the tens of trillions. The paper provides a comprehensive overview of the issues surrounding accelerated settlement and offers insights for industry practitioners. It was clear from our research that there is a perceived trade-off between the benefits of improving market efficiency and infrastructure and the increased risk of settlement failure. As our interviews were focused on those with settlement and operations functions, the tone of the responses was biased towards the latter. The findings of this study will help stakeholders identify gaps in their current settlement processes and develop strategies to meet the demands of accelerated settlement.