Sharat Priya is a Senior Manager in EY’s U.S. Wealth & Asset Management Technology practice, leading wealth platform modernization.
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You’ve probably sent money through Venmo or Apple Pay and seen it land instantly. The balance updates before you even lock your phone.
Now compare that to buying a stock. The trade itself happens in milliseconds, but the actual exchange of cash for shares doesn't happen until the next business day. Not long ago, it took two.
The gap between when a trade happens and when it officially settles is one of the longest-standing inefficiencies in financial markets. While most of finance has moved toward real time, stock settlement has only just reached T+1. The next step is T+0, or same-day settlement, and getting there is far more complicated than it sounds.
Settlement timing isn't just a technical detail; it has real consequences.
Every extra day between execution and settlement is a day when something could go wrong. A counterparty could default. A firm could run into liquidity issues. Markets could move sharply. Shrinking that window from T+1 to T+0 cuts risk from a full day down to just a few hours. That's a meaningful improvement in overall market safety.
There's also a capital angle. Institutions hold large reserves, margin, clearing deposits and other buffers to protect against unsettled trades. Faster settlement means those buffers can shrink, freeing up capital for other uses. When the U.S. moved from T+2 to T+1 in 2024, it unlocked around $3 billion. T+0 could push that even further.
Then there's competition. Crypto markets can settle in seconds, and a new generation of investors is getting used to that speed. When traditional markets feel slow, activity can drift toward less regulated platforms. Faster settlement isn't just about efficiency; it's about staying relevant and keeping investors in safer environments.
Not all "same-day settlement" is the same.
One version is end-of-day T+0. Trades happen throughout the day but are settled together in a batch at market close. It's faster than today's system but still relies on netting and batching.
The other is real-time T+0, where every trade settles instantly, one by one, with no waiting or batching. The transaction is final the moment it happens, similar to how blockchain works.
These two variations require completely different systems and have very different implications. Treating them as interchangeable makes the transition seem much easier than it really is.
End-of-day T+0 is the more realistic first step.
Even so, it's not simple. Settling all trades at once means a huge surge of cash moving through systems such as Fedwire at the end of the day. The capacity is there, but everything from cut-off times to stress-testing needs to be carefully coordinated.
Cross-border transactions make this even harder. When a foreign investor buys a U.S. stock, the security movement is only half of the transaction; the cash movement also has to happen. Aligning securities and FX settlement requires coordination between systems that weren't built to move in sync. The problem is solvable, but solving it the right way means giving international participants a realistic runway, not a hard deadline.
Retail platforms would also need a rethink. Right now, many investors fund trades after they execute, relying on next-day bank transfers. Same-day settlement shortens that window to just a few hours. That means platforms, payment flows and user experience all need to be redesigned to make it work smoothly.
Real-time settlement is a different level of challenge, and no major equity market has fully pulled it off yet.
The biggest issue is netting. Today, thousands of trades are offset against each other before settlement, dramatically reducing how much cash and securities actually need to move. According to a Depository Trust & Clearing Corporation (DTCC) whitepaper, NSCC's multilateral netting reduces actual settlement obligations by 98% in the U.S.
Real-time settlement eliminates that efficiency. Every trade settles individually, which means each one needs to be fully funded upfront. A shift to real-time settlements could eliminate the netting efficiency entirely and push daily liquidity needs by as much as 10x. Large banks might handle that, but smaller firms could struggle.
Under real-time T+0, pre-funding isn't optional for anyone. Every participant must hold the full settlement amount before the trade executes. For institutions, that's an expensive but manageable adjustment. For retail investors, it's a behavioral shift with real consequences. It changes who can actively participate in markets.
A phased approach makes the most sense.
Start with end-of-day T+0 as an optional system alongside T+1. Let firms adopt it when they're ready instead of forcing a full transition overnight. Focus first on domestic trades in large, liquid stocks while leaving more complex areas, such as cross-border activity, on T+1 until the infrastructure catches up.
Real-time settlement can remain a long-term goal, but getting there means solving deep structural issues around liquidity, netting and central bank involvement. That's a multiyear effort involving both technology and regulation.
New technologies such as distributed ledgers, tokenized assets and real-time data systems will help. However, technology can't outrun the institutional and regulatory redesign that has to accompany it.
For anyone building financial platforms, this shift raises some immediate questions.
Are your systems designed for same-day funding, or do they still rely on next-day assumptions? Is your architecture truly real time, or does it depend on batch processing that could become a bottleneck?
Same-day settlement is already happening in parts of the world. The decisions being made now will determine how ready U.S. markets are when it fully arrives.
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