Benefits Of Reducing Settlement Time In Securities Ecosystem
By Othman Darwish The settlement process is defined as a legal transition during the time span between trade and settlement, a purchaser’s rights are purely contractual and thus personal, and only after settlement, they become proprietary, terminating counterparty risk. Securities settlement usually follow the delivery of securities against ( and in the same time ) the transfer of fund , this is termed as DvP in which a linkage between securities and fund transfer occur simultaneously to ensure delivery happen if and only if corresponding payment occurs. The abbreviation of T+1,T+2 ,and T + 3 donate the day settlement occurs on a transaction , if investor buys shares stock on Monday , then Monday is the transaction date , if the transaction has T + 3 settlement date ,the settlement date is Thursday ,T +2 would be on Wednesday , the settlement date is the day ownership transfers , settlement periods among securities vary ,stock and mutual funds are T + 3 ,bonds and s...