The US financial market has halved the time for settling deals from two days to one. That will increase costs, and make it harder for international investors to buy into the world’s largest economy.
When Wall Street re-opens after Monday’s Memorial Day holiday, trading will resume as normal. Yet when it comes to settling those trades, the process will be anything but normal.
They’ll also have to acquire the US dollars needed to buy the US shares before receiving funds from the shares they’ve sold, with a significant risk that equity and currency markets may have moved against them in the meantime.They may also have to staff their offices at unusual and difficult times.
Australian Eastern Standard Time is generally 14 hours ahead of the US Eastern Standard Time and 8 to 9 hours ahead of the time in Europe and the UK. It does, however, also mean a lot more automation for the firms involved, which means more costs that will probably be recovered from buyers and sellers – costs that will be even greater for foreign investors in the US because of the repercussions of the mismatches within the settlements periods for the different equities markets and the foreign exchange implications of those mismatches.
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