Effective today, US stock trades settle one day after they’re made rather than two days after, which had been the earlier rule. Even that is down from t (i.e., trade date) +5, which was the original official SEC rule for settlement, made in 1975.

The overall idea of the rule is to minimize the chances of disruption of the financial system if an important player, say, a major brokerage house, is unable to hold up its side of the bargain. …it goes out of business, for instance, before a trade settles. A generation ago, a business failure could have affected a week’s worth of trading. As of today, it’s a day.

This shouldn’t make much difference to most of us. Two exceptions:

–foreign exchange trades normally settle on t+2. So if I’m a foreign entity and I buy a US stock today, I need to have dollars tomorrow to settle. So I need to have done a forex trade yesterday–before I knew precisely the dollar amount I’d need. I think this is a minor issue and that a workaround is elther already in place or will soon be.

–when a short-seller approaches a broker with a short transaction, the broker must either have the stock that will be sold short already in hand or have the firm belief that he can borrow it in time for the transaction to settle. Before today, that meant having two days to make a stock loan. Now it means only one. This is probably bigger issue than dealing with a non-US investor, but still a minor concern for the overall stock market. Still, this may have a considerable impact on shorting of thinly-traded stocks.