February 27, 2024

The market and index impact of shorter equity settlement cycles

In May 2024 the US equity market will shorten its settlement period from two days after trade date to one. We review the implications of this change for equity markets, related financial market processes and for the calculation and provision of indices.

What our research means for investors

This research aims to help investors become aware of the wide range of financial market activities that will be impacted by shorter US equity settlement cycles. It will also help index users become aware of the potential knock-on effects.

Points of differentiation:

We examine in detail some of the potential knock-on effects of a shorter US equity settlement cycle. FTSE Russell calculates global equity indices for a wide range of market participants and we look at the potential impact of the change on those using indices for performance measurement or as the underlying target of an index-tracking fund.