Stock Markets
Wall Street says shift to faster trade settlement smooth so far
By Carolina Mandl and Davide Barbuscia
NEW YORK (Reuters) -The transition to a faster trade settlement cycle in the U.S. has so far gone smoothly, according to market participants and new data on Wednesday.
On Tuesday, U.S. trading of equities, corporate and municipal bonds and other securities moved to a one-day securities settlement cycle (T+1) from two days (T+2), to comply with a rule change adopted last February by the U.S. Securities and Exchange Commission.
The Securities Industry and Financial Markets Association (Sifma) said it was optimistic about the progress of the transition to faster trade settlement, while the Investment Company Institute said in a statement that “all T+1 implementation activities have been completed and appear to be operating normally.”
“The first day of trading under T+1 settlement went smoothly,” said William Coleman, head of U.S. ETF Capital Markets at Vanguard. “While there may be some increased risk of failed trades as firms continue to adjust to the new settlement regime, we expect most trades will settle successfully today.”
An early indication came from data on trade affirmations – or when trade participants verify and agree on the trade details. The Depository Trust and Clearing Corporation said that as of Tuesday evening the rate of total trades being affirmed was 92.76%, higher than Friday’s 89.59%.
The higher the affirmation rate is, the more likely trades are to be successfully settled.
Settlement is the process of transferring securities or funds from one party to another after a trade has been agreed. It takes place after clearing and is handled by the Depository Trust Company, a subsidiary of DTCC.
Still, Stephane Ritz, a managing principal at consultancy Capco, said there were delays overnight in processing and preparing some trades for settlement at the National Securities Clearing Corporation (NSCC), a subsidiary of the DTCC. Ritz said that the issue had been addressed and orders had now caught up.
“There’s no true real impactful issue there … they addressed the issue on a very timely fashion,” said Ritz.
DTCC did not immediately comment on the matter.
The shift to a faster settlement in the world’s largest financial market is aimed at making market infrastructure more resilient, but it has put investors and regulators on alert for increased trade failures and other hiccups.
Wall Street is undergoing its first big test on Wednesday, when trades executed last Friday, when T+2 was still in place, and trades from Tuesday, the first day of T+1, are being settled. This is expected to lead to a rise in volume.
Market participants expect to see an increase in trade failure as the industry adjusts to the faster settlement cycle. Research firm ValueExchange said on average market participants expect the fail rate to increase to 4.1% after T+1 implementation, from 2.9%.
The U.S. follows Canada, Mexico, Argentina and Jamaica, which implemented T+1 on Monday.
In Canada, T+1 changes were implemented successfully and are functioning as expected, despite some isolated delays, which were addressed, a spokesperson for TMX, the owner of Canada’s national securities depository, the Canadian Depository for Securities, said in an e-mail.
(Reuters) -Private equity firm Insight Partners is on the brink of closing a new $10 billion-plus fund, roughly half the amount originally targeted, the Financial Times reported on Sunday, citing five people with knowledge of its plans.
Insight will not formally close its 13th fund until early next year, the report said, adding that the final figure may be closer to $12 billion.
Insight Partners declined to comment on the report.
The report said Insight is using a private equity-style structure to sell more than $1 billion worth of stakes in start-ups and to free up cash to return to investors.
One of the start-ups is Israeli cybersecurity firm Wiz, which had called off a $23 billion deal with Google parent Alphabet (NASDAQ:) in July, the report said.
New York-based Insight raised $20 billion for its 12th flagship fund in 2022, aiming to ramp up investments in software and technology companies.
JERUSALEM (Reuters) -Prime Minister Benjamin Netanyahu said Israel would inflict a “heavy price” on the Iran-aligned Houthis who control northern Yemen, after they reached central Israel with a missile on Sunday for the first time.
Houthi military spokesman Yahya Sarea said the group struck with a new hypersonic ballistic missile that travelled 2,040 km (1270 miles) in just 11 1/2 minutes.
After initially saying the missile had fallen in an open area, Israel’s military later said it had probably fragmented in the air, and that pieces of interceptors had landed in fields and near a railway station. Nobody was reported hurt.
Air raid sirens had sounded in Tel Aviv and across central Israel moments before the impact at around 6:35 a.m. local time (0335 GMT), sending residents running for shelter. Loud booms were heard.
Reuters saw smoke billowing in an open field in central Israel.
At a weekly cabinet meeting, Netanyahu said the Houthis should have known that Israel would exact a “heavy price” for attacks on Israel.
“Whoever needs a reminder of that is invited to visit the Hodeida port,” Netanyahu said, referring to an Israeli retaliatory air strike against Yemen in July for a Houthi drone that hit Tel Aviv.
The Houthis have fired missiles and drones at Israel repeatedly in what they say is solidarity with the Palestinians, since the Gaza war began with a Hamas attack on Israel in October.
The drone that hit Tel Aviv for the first time in July killed a man and wounded four people. Israeli air strikes in response on Houthi military targets near the port of Hodeidah killed six and wounded 80.
Previously, Houthi missiles have not penetrated deep into Israeli air space, with the only one reported to have hit Israeli territory falling in an open area near the Red Sea port of Eilat in March.
Israel should expect more strikes in the future “as we approach the first anniversary of the Oct. 7 operation, including responding to its aggression on the city of Hodeidah,” Sarea said.
The deputy head of the Houthi’s media office, Nasruddin Amer, said in a post on X on Sunday that the missile had reached Israel after “20 missiles failed to intercept” it, describing it as the “beginning”.
The Israeli military also said that 40 projectiles were fired towards Israel from Lebanon on Sunday and were either intercepted or landed in open areas.
“No injuries were reported,” the military said.
PARIS (Reuters) – Eight people have died trying to cross the Channel from France to England, French authorities said on Sunday, confirming earlier media reports.
This latest incident follows the deaths of 12 people earlier this month when their boat capsized in the Channel on its way to Britain and highlights the pressure on the British and French governments to find ways to tackle the boat crossings.
Jacques Billant, the Prefect of the Pas-de-Calais region, said that rescue crews were alerted that a boat with 59 people onboard was in difficulty in waters off the coast of Ambleteuse in the Pas-de-Calais area.
“A new drama took place around one in the morning and we deplore the death of eight people,” he told a news conference, adding that the other 51 onboard were now in the care of rescue and medical crews.
The dead were men from Eritrea, Sudan, Syria, Egypt, Iran and Afghanistan, he added.
The Channel is one of the world’s busiest shipping lanes and currents are strong, which makes crossing on small boats dangerous.
The latest incident brings to 46 the number of people who have died trying to cross the Channel from France since the start of the year, Billant said.
On September 14 alone there were eight attempts to cross the Channel from France and some 200 migrants were rescued, he said.
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