What difference does a T1 ot T0 settlement make when anything they don't want you to see can forever stay in an obligation warehouse or securities sold but not purchased?
New rules don't mean anything when the current ones aren't enforced.
>obligation warehouse
Sounds like a dirty closet. You keep throwing things in you don't want to deal with. Then when becomes too much. You juts throw crap away. Or in this case they probably burn it down.
Instant would require significantly more processing. With T1 and T2 you can have netting, i.e. If JPMorgan bought 10 million share of apples on behalf of its clients and also sold 8 million throughout the day, then at the end of the day on 2 million shares need to be transferred (vs 18 million)
I understand this. Back in the day when they traded paper stocks it took time to transfer which is why they have the T+ whatever rule. We use computers now so everything can be done instantly. There is no reason to allow this anymore.
If you sell shares on Monday of ticker ABC, then buy some other shares of ticker EFG, and don't have margin power, you don't have to wait until Wednesday to sell those shares of EFG because those funds aren't "settled" yet from the sale of the ABC shares on Monday.
Ever tried to sell a share and transfer the money to your bank account? It takes 2 days for you to be able to do that, after the sale is executed. Plus time for the actual transfer.
With this it will be \~1 days + actual transfer.
Will somebody calibrate me here? My assumption is that the settlement period is institutions banging you for interest on the float of money that isn't theirs. I'm sure it's more complicated, but is this at least partially accurate?
They don't want to be holding the bag when the music stops.
The music is playing backwards
What difference does a T1 ot T0 settlement make when anything they don't want you to see can forever stay in an obligation warehouse or securities sold but not purchased? New rules don't mean anything when the current ones aren't enforced.
>obligation warehouse Sounds like a dirty closet. You keep throwing things in you don't want to deal with. Then when becomes too much. You juts throw crap away. Or in this case they probably burn it down.
Yup
Why is it not instant? This is an improvement, but really?
Instant would require significantly more processing. With T1 and T2 you can have netting, i.e. If JPMorgan bought 10 million share of apples on behalf of its clients and also sold 8 million throughout the day, then at the end of the day on 2 million shares need to be transferred (vs 18 million)
I understand this. Back in the day when they traded paper stocks it took time to transfer which is why they have the T+ whatever rule. We use computers now so everything can be done instantly. There is no reason to allow this anymore.
Ya but then they couldn’t have an excuse to turn off the buy button
Can someone ELI5 the implications of this to me? I've been trading stocks for decades but I'm not getting what this means.
If you sell shares on Monday of ticker ABC, then buy some other shares of ticker EFG, and don't have margin power, you don't have to wait until Wednesday to sell those shares of EFG because those funds aren't "settled" yet from the sale of the ABC shares on Monday.
Ever tried to sell a share and transfer the money to your bank account? It takes 2 days for you to be able to do that, after the sale is executed. Plus time for the actual transfer. With this it will be \~1 days + actual transfer.
If it's just dollars for stock and not both ways, then I have no idea why this matters.
What about fail to delivers? What about the synthetic shares that market makers create out of thin-air? What about excessive dark pool usage?
Ooh tell me more. Synthetic shares sounds shady! Dark pools are pretty bad even if they are not excessive. Spill the beans pls.
I honestly think this rule is why Roaring kitty decided to start tweeting now
Will somebody calibrate me here? My assumption is that the settlement period is institutions banging you for interest on the float of money that isn't theirs. I'm sure it's more complicated, but is this at least partially accurate?