T+2 to T+1, Upstream’s global market is already at T+0 trading and settlement

Experience the Future of trading with Upstream’s T+0 Settlement Times

By Fernanda De La Torre

As of May 28, 2024, Nasdaq and other U.S. capital markets have transitioned to a T+1 settlement cycle for securities trading.¹ This means that trades of stocks, exchange-traded funds (ETFs), corporate bonds, and other securities now settle in one business day instead of two.

Despite U.S. capital markets transitioning to T+1, global markets lack a standard settlement time, which can vary by country and the type of security being traded. On average, most global markets are still operating at T+2.²

What does this mean?

The term “T+1” stands for “trade-day-plus-one-business-day”. Trade settlement is the exchange of cash and securities between a buyer and seller after a trade is executed. The transition to T+1 is expected to bring significant improvements to the marketplace. By reducing the time between the trade date and settlement date from two business days to one, the risk of counterparty default is minimized, especially during periods of high volatility.

Additionally, this shift will necessitate new investments and processes across the industry to meet the shortened timeline. The Securities and Exchange Commission (SEC) adopted rule amendments in 2023 to implement this change, reflecting the ongoing evolution of technology and the increased trading volume observed since 2020.³

Benefits of T+1

• Reduced Counterparty Risk: Shortening the settlement cycle decreases the likelihood of default by minimizing the time securities and funds are exposed to market risks.
• Increased Efficiency: Faster settlements streamline the transaction process, reducing delays and improving overall market functioning.
• Lower Margin Requirements: With reduced settlement risk, firms can lower their margin requirements, freeing up capital for other investments and operational uses.
• Enhanced Liquidity Use: Firms can use their liquidity more efficiently, contributing to a more dynamic and responsive market.
• Operational Improvements: The move to T+1 encourages the adoption of advanced technologies and process automation, leading to long-term operational efficiencies and cost reductions.

Upstream, a MERJ exchange market, is one step ahead by offering T+0 settlement

While the broader markets have recently transitioned from T+2 to T+1 settlement times, Upstream introduces the concept of T+0 settlement, marking a favorable departure from the conventional settlement period. Thanks to Upstream’s smart-contract powered matching engine, our trades are executed in real-time. This means there’s no delay between the occurrence of a trade and the updating of ownership records. With Upstream, the settlement process is instant, providing a beneficial leap in efficiency for issuers and their investors.

Upstream’s global securities trading app is powered by Horizon’s smart contract technology which features 20 hours a day, 5 days a week trading. International investors experience streamlined onboarding and transparent orderbooks with best bids and offers publicly available for all to see. The software was also designed to prevent short selling, market makers, payment for order flow, and other possible market manipulation techniques. T+0 trade settlement and the other smart-contract enabled benefits minimize reliance on intermediaries and expedites the entire trading process.

It’s typically difficult for investors outside the U.S. to gain access to U.S. and international equities. Many foreign stock markets lack a direct app-based trading solution to reach modern investors seamlessly.

Upstream’s goal is to help U.S. and international issuers reach new investors and increase shareholder value on the only securities market seeking to offer investors direct exchange access to primary and dual listed equities from all over the world. Note that U.S investors may not deposit, buy or sell securities on Upstream.

The benefits of being T+0

• Instant Settlement: Trades are settled immediately, eliminating counterparty risk entirely.
• Enhanced Market Confidence: Immediate settlement fosters greater trust and confidence among investors.
• Improved Liquidity Management: Immediate access to funds and securities allows for better liquidity management potential and operational flexibility.
• Reduced Operational Costs: Eliminates the need for complex settlement processes and reduces associated administrative costs.
• Increased Trading Volume: Faster settlements can potentially lead to higher trading volumes as investors can reinvest funds more quickly.

Conclusion

The transition to T+1 settlement times marks a significant improvement in the efficiency and security of U.S. securities transactions. While the broader market adapts to this change, Upstream remains ahead of the curve, offering T+0 settlement times and a cutting-edge trading platform that ensures immediate settlement and increased shareholder value. As the industry continues to evolve, Upstream is committed to providing innovative solutions that meet the needs of modern investors and issuers.

If you’re interested in learning more about Upstream visit upstream.exchange.

Sources

1 NASDAQ |2 S&P Global | 3 NASDAQ

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U.S. persons may not deposit, buy, or sell securities on Upstream. This communication shall not constitute an offer to sell securities or the solicitation of an offer to buy securities in any jurisdiction where such offer or solicitation is not permitted. NFTs have no royalties, equity ownership, or dividends. NFTs are for utility, collection, redemption, or display purposes only. Anyone may buy and sell NFTs on Upstream. All orders for sale are non-solicited by Upstream and a user’s decision to trade securities must be based on their own investment judgment.

Upstream is a MERJ Exchange market. MERJ Exchange is a licensed Securities Exchange, an affiliate of the World Federation of Exchanges, a National Numbering Agency, and a member of ANNA. MERJ is regulated in the Seychelles by the Financial Services Authority, https://fsaseychelles.sc/, an associate member of the International Association of Securities Commissions (IOSCO). MERJ supports global issuers of traditional and digital securities through the entire asset life cycle from issuance to trading, clearing, settlement, and registry. It operates a fair and transparent marketplace in line with international best practices and principles of operations of financial markets. Upstream does not endorse or recommend any public or private securities bought or sold on its app. Upstream does not offer investment advice or recommendations of any kind. All services offered by Upstream are intended for self-directed clients who make their own investment decisions without aid or assistance from Upstream. All customers are subject to the rules and regulations of their jurisdiction. By accessing the site or app, you agree to be bound by its terms of use and privacy policy. Company and security listings on Upstream are only suitable for investors who are familiar with and willing to accept the high risk associated with speculative investments, often in early and development-stage companies. U.S. persons may not deposit, buy, or sell securities on Upstream. There can be no assurance the valuation of any particular company’s securities is accurate or in agreement with the market or industry comparative valuations. Investors must be able to afford market volatility and afford the loss of their investment. Companies listed on Upstream are subject to significant ongoing corporate obligations including, but not limited to disclosure, filings, and notification requirements, as well as compliance with applicable quantitative and qualitative listing standards.

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