The leading U.S. exchange for technology giants is moving toward blockchain-based listing and trading of stocks, filing a request with the SEC to pursue it.
The leading U.S. exchange for technology giants is moving toward blockchain-based listing and trading of stocks, filing a request with the SEC to pursue it.
It would reduce the settlement time from multiple days to likely minutes.
When you trade a stock today, it’s not actually complete for 2 or 3 business days as it has to go through the settlement process. Generally, it doesn’t cause problems for retail traders as exchanges act like its completed, but even for us it can introduce real issues sometimes and delay you from making a trade.
For example, in Canada, the cheapest way we can convert CAD<–>USD is through a process called Norbits Gambit.
You buy DLR.TO (CAD) or DLR.U.TO (USD) and then your have them journal your shares from one to the other for free, or a small fee like $10. You don’t pay an exchange rate fee, however, because the trade hasn’t actually settled when you buy the shares for 3 days, they can’t journal them. So for 3 business days you’re exposed to any fluctuation in the exchange rate. Generally that’s cheaper than what a bank will charge you and it’s the risk you take. It’s also a 1 way risk, I can’t recall if it’s USD -> CAD or CAD -> USD, but one of them is locked in, and the other is exposed. (Edit: It’s DLR.U.TO that exposes you. Holding either is like holding USD, so when you buy DLR.TO you already bought the USD value in CAD)
At WealthSimple, when you sell some shares, you can’t actually transfer the money to your bank account on the same day. The balance isn’t available to transfer.
I’m sure it can cause more problems for professional traders and institutional stuff, and even other ways it impacts us that I don’t know about.
Stocks on the Nasdaq and the rest of the USA exchanges are at T+1, transaction date plus one day. So they settle the next business day not in 2 to 3 days like you mentioned.
Dlr is canada and takes 3 days.
And even a +1 day is a long time. And then there’s weekends and holidays. So you could do something on Thursday, Fridays a holiday, so then it’s Monday is the +1 and you are settled and complete on Tuesday morning.
A lot can happen between a Thursday morning trade and Tuesday morning, and a lot can happen in a regular +1 day. The markets don’t really care about non business days and shit happening.
Same day within minutes settlement would be huge.