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MarketScape · 06.24.24

Transitioning to T+1 Settlement Cycles: The Advantage of Firm Expertise

Adapting to the new cycles requires swift operational changes, making the guidance of experienced managers crucial.

  • Volatility & Risk
  • Equity Insights
  • Tax Advantaged Equity
  • Market & Investment Trends

Key Points

What it is

A new settlement cycle means that securities’ transactions in the U.S., Canada, and Mexico will settle within one business day, requiring rapid adjustments from investment teams.

Why it matters

This accelerated timeline requires investment managers to promptly adjust settlement processes, manage liquidity, and streamline operations.

Where it's going

The shift toward T+1 settlement will likely expand globally, highlighting the importance of agile operations for investment managers.

Along with economic challenges and evolving market dynamics, global investors face new hurdles with the recent changes in settlement cycles. The Security and Exchange Commission’s recent move to shorten the standard settlement cycle for most security transactions in the U.S. from T+2 to T+1 marks a significant shift that will present both challenges and opportunities for investment managers. Let’s take a closer look.


Under the new , all applicable securities’ transactions from U.S. financial institutions will settle in one business day from the transaction date. Canada and Mexico have also transitioned to a T+1 cycle. Operational changes are inevitable as investment managers adjust to the new trading environment. These changes present certain challenges for global investors, as North American securities will now settle one day earlier than most parts of the world. Navigating this landscape efficiently will be key for investment teams to minimize operational headaches and costs for clients. Firms with scale and experience managing different market settlements are better suited to accommodate this change.


Facilitating  will typically incur additional transaction costs in the form of commissions paid to broker-dealers. These costs, for short or long settlements, are essentially a finance charge to cover borrowing cash before or after the standard settlement.  Firms with a long history of managing ordinary share portfolios and experience managing  with different market settlements, such as accounts impacted by global holiday schedules, have the scale and sophistication to guide their clients through the change.


The shift to the T+1 settlement cycle in the U.S., Canada, and Mexico present . Investment managers are handling these new challenges in various ways, and some firms have made major operational changes in the way global portfolios are held at custody. Firms with diligent portfolio management teams, advanced technology, and sophisticated global equity trade desks, will be well-positioned to manage these challenges smoothly and efficiently using strategies that have served them well for decades.

Main Point

The T+1 Shift: Key Insights for Investors

Discover how the recent transition to T+1 settlement cycles in the U.S., Canada, and Mexico impacts global investors. Learn about the operational challenges, cost implications, and strategic advantages of working with experienced investment managers in this evolving landscape.

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Mary Lukic, CFP

Head of Tax-Advantaged Equity

Mary Lukic heads the tax-advantaged equity portfolio management team, which is responsible for tax-managed, dividend, ESG (environmental, social and governance) and quantitative active strategies. She is also a senior portfolio manager on the global equities investment team. Mary has extensive experience providing custom equity solutions to high-net-worth families, nuclear decommissioning trusts, settlement trusts, insurance companies, and other taxable and tax-exempt investors.

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Northern Trust Asset Management (NTAM) is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.


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