The majority of market participants anticipate that the settlement cycle for equities will be shortened to T+1 within the next five years, according to recent research.
A survey conducted by Citi revealed that 51% of approximately 300 financial services firms expect next-day settlement by 2026, marking a seven-point increase from the previous year’s findings.
This expectation is bolstered by the actions of key equities markets in the US, Canada, and Italy, all of which are actively transitioning toward T+1 settlement.
The study also highlights considerable support for blockchain and distributed ledger technology (DLT), with 54% of respondents indicating that such technology could reduce post-trade processing costs by 10-30%. Additionally, 92% recognize the benefits of tokenization for enhancing market liquidity.
However, DLT’s influence on the shift to T+1 is predicted to be limited, as only 21% believe it will be central to achieving a shorter settlement cycle.
Finextra has also announced its fifth Sustainable Finance Live conference and hackathon, set to occur on November 29. For more information and to register for the event, please visit the event page here.