Starting next Tuesday, the settlement cycle for broker-dealer transactions will be shortened to one business day, from the current two-day cycle. This change is expected to make the market more efficient and resilient, according to Gary Gensler, chair of the Securities and Exchange Commission. The new rules will apply to various types of securities, including stocks, bonds, and exchange-traded funds, and will impose new recordkeeping rules on broker-dealers and registered investment advisors.
Some investors believe that the shorter settlement cycle will free up more liquidity in the market and reduce volatility in margins, as it decreases the chances of default before transactions are completed. Clearinghouses will also play a crucial role in ensuring the success of this transition by collecting margins from traders as evidence that they can afford to make the transaction. While there may be some initial challenges, the move towards T+1 settlement is expected to benefit both institutional and retail investors in the long run.
The decision to shorten the settlement cycle stems partly from the 2021 meme stock frenzy, where social media-driven trading led to extreme volatility in stocks like GameStop and AMC Entertainment. The existing two-day settlement period was cited as a contributing factor in these events, prompting calls for real-time settlement processes. This change is intended to reduce unnecessary risks for investors and the industry, according to Robinhood CEO Vlad Tenev.
Boeing is set to present its plan to address quality control issues on its assembly line to US regulators next week. The plan was requested by the Federal Aviation Administration following concerns about manufacturing quality control requirements after a 737 Max experienced a structural failure mid-air. Boeing’s chief financial officer expressed confidence in the plan and expects constructive feedback from regulators. FAA Administrator Mike Whitaker emphasized that this plan is just the beginning of a process to ensure the safety of Boeing’s aircraft.
Meta recently appointed a group of outside advisors, all White men, to provide guidance on its artificial intelligence strategy. Despite their significant experience in the tech industry, Meta has faced criticism for the lack of diversity in the group advising one of the most influential tech companies on a revolutionary technology. This situation echoes previous incidents in the tech industry where lack of diversity in leadership roles has sparked backlash. Meta’s AI investment plans underscore the importance of diverse perspectives in shaping the future of technology.
In conclusion, the upcoming shift to a one-day settlement cycle for broker-dealer transactions and Boeing’s efforts to address quality control issues highlight ongoing changes in the financial and technology sectors. These developments reflect the industry’s response to challenges such as market volatility and regulatory scrutiny. The importance of diversity and inclusion in decision-making processes, as seen in Meta’s advisory group composition, remains a key consideration for companies as they navigate complex issues and strive for innovation and growth.
