EU financial chief: bloc will slash settlement times to match US.

TITLE: SEC’s Gensler calls for shorter settlement times in currency markets


  • Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has called for shorter settlement times in currency markets.
  • Gensler argued that shorter settlement times would reduce risk in the markets and increase efficiency and transparency.

SEC Chairman Gary Gensler has called for shorter settlement times in currency markets in a bid to reduce risk and increase efficiency in the sector. Gensler made the comments during a virtual keynote speech at the DTCC’s annual Fintech Symposium in New York. He argued that reducing settlement times from the current two-day standard to one or even zero would significantly reduce risk and improve market functioning. He cited recent events such as the collapse of Archegos Capital Management and the meme stock phenomenon as evidence of the need for faster settlement times.

Gensler believes that speeding up settlement times would reduce the exposure of financial institutions to counterparty risk and limit potential market disruptions. He also argued that shorter settlement times would increase transparency and enable regulators to more effectively monitor and enforce rules. Presently, it takes two days for funds to settle in currency markets, a process that could be shortened through digital innovation and automation.

The SEC has already taken steps to address settlement concerns, with Gensler highlighting the agency’s recent proposal to amend rules to speed up the settlement process. The proposal would require broker-dealers to settle trades within one business day after the trade date. Gensler also noted that the SEC has formed a new group to review market structure issues, including settlement times for equity and fixed income markets.

Market participants have generally welcomed Gensler’s call for shorter settlement times, with many believing that it would lead to improved efficiency and reduced costs. Some, however, have voiced concerns about the potential impact on smaller firms that may not have the resources to adapt to faster settlement processes. Others have raised questions about the technical challenges of implementing faster settlement times, particularly for cross-border transactions.

Nevertheless, Gensler’s comments suggest that the SEC may soon take further action to accelerate settlement times in currency markets. Regulators and market participants will be closely watching for any new rules or proposals from the SEC in the coming months. Shorter settlement times could have a significant impact on the currency market, reducing risk and increasing transparency and efficiency.