SEC to Hasten Settlement Amid Uncertainty for ETFs

US regulators are set to overhaul settlement times
for securities trades next May. While this move is expected to have a positive
impact, it brings significant concerns for over $1 trillion in Exchange-Traded
Funds (ETFs). Market experts warn that the upcoming change will lead to
increased costs and operational complications, primarily affecting more than
500 US-listed funds that hold overseas assets.

According to a report by Bloomberg, this step could
pose challenges for ETFs, especially those holding overseas assets. As the
settlement time for transactions in ETF shares decreases from two days to one,
the underlying assets may still take two to five days to complete, depending on
their location. This creates a significant discrepancy in settlement
Settlement

Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer’s name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2

Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer’s name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2
Read this Term times that
could result in double trouble for key players in the ETF market.