Tuesday, February 15, 2022

T+1: The Future is Now (or at least as early as 2024)

The SEC Boldly Sets Course for T+1 and T+0

Author: David Schwartz J.D. CPA

While real-time settlement is still something that may happen far in the future, perhaps on the Starship Enterprise, T+1 is now imminent. On February 9, 2022, the Securities and Exchange Commission proposed to make T+1 a reality. The proposal aimed at reducing risks in clearance and settlement seeks comment on shortening the current T+2 standard settlement cycle for most broker-dealer transactions by one day to T+1. Notably, the proposal also makes clear that T+0 is the ultimate and eventual goal and explicitly solicits comments on associated challenges and potential paths to achieving a same-day settlement cycle.

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Friday, February 11, 2022

How Would Cross-Border Payments Change in a Digital Currency World?

World Bank, BIS and SWIFT weigh in on CBDCs

Author: David Schwartz J.D. CPA

Widespread adoption of central bank digital currencies (CBDC) could revolutionize cross-border payments by reducing friction and making it possible for T+1 or even T+0 settlement of cross-border trades. The Fed’s Digital Currency discussion paper is the central bank’s first step in a public discussion with stakeholders about a digital dollar, as we described in our January 25 post. But what would such a cross-border payment system look like? Is it enough to mimic the traditional systems of SWIFT, DTCC, and others? Or does the unprecedented interoperability and technology of CBDCs force obsolesce on the current systems? 

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Tuesday, January 25, 2022

The Fed Weighs in on a 'Digital Dollar'

Vast Cross-border Implications for Central Bank Digital Currencies

Author: David Schwartz J.D. CPA

A discussion paper published on January 20th invites the public to explore with the U.S. Federal Reserve Board the creation of a digital version of the U.S. dollar. A Central Bank Digital Currency (CBDC) backed by the Federal Reserve would be designed, according to the Fed’s paper, to compete with cryptocurrencies like Bitcoin and Ethereum. Comments are due by May 20, 2022.

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Saturday, January 22, 2022

Lenders and Borrowers Sound off on the SEC's Disclosure Proposal

Giving the SEC an Earful and Sounding the Alarm

Author: David Schwartz J.D. CPA

The Securities and Exchange Commission's (SEC) securities lending disclosure proposal has drawn sharp rebuke from both securities lenders and borrowers. Lending principals criticized the proposal on everything from cost, lack of clarity, and overbroad scope to the rule's general inequity. They also pointed out a host of potential unintended consequences that could work against the very transparency the rule proposal was intended to foster. 

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Tuesday, January 18, 2022

Balancing the Risks of Loan Disclosures for Traders

Is 10c-1 Regulatory Overreach? Or a Good Starting Point?

Author: Ed Blount

“The best trader I ever knew was broken when he took over a dying friend’s book. Everyone knew the book and turned on him.” Born in 1899, Henry Goldberg was the oldest trader on the floor of the New York Stock Exchange when I interviewed him in 1985. He answered my questions about trading expertise during a NYSE-sanctioned survey to find possible use cases for artificial intelligence. 

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