Welcome to money for the rest of us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it.

I'm your host David Stein. Today is episode 480. It's titled Beyond Faster T-plus-1

trade settlements, the hidden costs of optimization. Beginning today in the US,

trades for stocks, corporate bonds, exchange trader funds,

mutual funds, and options will settle in one day instead of two.

And by settle, we mean that the exchange of dollars for the particular security will clear and the seller will receive the money they got

and the buyer will get the security they got it will be reflected in their account.

SEC Commissioner Gary Gensler said for be reflected in their account.

SEC Commissioner Gary Gensler said,

for everyday investors who sell their stock on a Monday,

shortening the settlement cycle will allow them

to get their money on Tuesday.

Shortening the settlement cycle also will help the markets,

because time is money and time is risk.

It will make our market plumbing more resilient, timely and orderly.

Back in the late 1960s, stocks and other securities took a week or more to settle. We discussed this in episode 2 18 because when you

purchase a security you received a stock certificate and there was a paperwork crisis because trading volume

went from 3 million stock shares a day in 1960 to 12 million in 1970 and the paperwork would get so backed up they would have to shut down

trading and take a day off so they could catch up with the paperwork.

They solved that problem by depositing all these stock certificates in a central

depository known as the depository trust account and then the stock

certificates were held in the name of the brokers.

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