A study by Citi Securities Services found that 44% of global respondents believe the US stock settlement period will be shortened to T+1 from T+2 currently by 2026.
It also found that market participants such as asset managers, brokers, custodians and institutional investors have markedly different views from financial market infrastructure providers about the obstacles for a shorter settlement period and the role of digital ledger technology (DLT).
Most of infrastructure providers ranked business process efficiency and alignment as the biggest stumbling blocks for a shorter clearing and settlement cycle. By contrast, only 10% of market participants rated this as a primary factor.
"Market participants instead saw cash, funding and liquidity management as the greatest obstacle," according to Citi’s report published on October 22.
Without providing the actual share, it says most infrastructure providers did not view DLT as necessarily essential for a shorter settlement period, but 64% of market participants believe DLT-based infrastructure will moderately or significantly improve overall efficiency and cut cost.
The study, done between July 28 and September 1, compiled responses from 400 market participants and 15 financial market infrastructure providers worldwide.
Citi Securities Services had US$30 trillion of assets under custody and administration as of end-June.