US Stocks to Adopt 'T+1 Settlement' by End of This Month... Korea Securities Depository Says "No Significant Impact on Domestic Stock Trading"

Preparation for Business System Changes with 25 Securities Firms
At the Start of System Changes, Settlement Instruction Input Time Moved Forward from 9 AM to 6 AM

The Korea Securities Depository (KSD) announced on the 16th that it is preparing related tasks and system changes with 25 securities firms in anticipation of the shortening of the settlement cycle in the U.S. securities market scheduled for the 28th.

The U.S. securities market currently adopts a "T+2 settlement," where securities and funds are settled two business days after the transaction date. However, in February last year, the U.S. Securities and Exchange Commission (SEC) changed the system to "T+1 settlement," shortening the cycle by one business day.

With this system change, to prevent settlement failures, it is mandatory to complete settlement approval processes?including trade confirmation, settlement data finalization, and approval?on the transaction day itself.

Accordingly, KSD reviewed key issues and implementation matters regarding the "T+1 settlement" with Citibank, the U.S. market custodian, and improved the operational processes of both parties through the expansion of IT systems.

Additionally, KSD prepared and provided guidance on initiatives such as ▲adjustment of business hours ▲improvement of IT system performance and processing speed ▲support for settlement execution to 25 domestic securities firms offering U.S. stock brokerage services.

To respond to the reduced business hours caused by the shortened settlement cycle, KSD decided to advance the input time for settlement instructions by domestic securities companies from the current 9 a.m. to 6 a.m. during the initial phase of T+1 settlement implementation, and especially set the period from 8 a.m. to 10 a.m. as the concentrated processing time for settlement instructions.

KSD expects that the shortening of the settlement cycle will have little impact on domestic stock trading. Furthermore, while the withdrawal of settlement funds will occur one day earlier, there will be no changes to trading hours, trading methods, or trading costs. However, since the repayment deadline for unsettled U.S. stock trades may be moved forward, changes will be communicated to domestic investors through each securities firm's website and HTS.

A KSD official stated, "To respond to the reduced business hours caused by the shortening of the settlement cycle, we plan to operate an early work system on weekdays and holidays during the initial phase of T+1 settlement implementation," adding, "We will make every effort to ensure the smooth implementation of the T+1 settlement scheduled for the 28th."

This content was produced with the assistance of AI translation services.