Is the Industry Ready for T-0 Settlement? (2018)

1. almost a week later, there are still people in certain communities (eg. wsb) that still believe in the conspiracy, and haven't bothered to inform themselves of at least the counter-arguments (eg. DTCC deposit requirements).

2. prominent politicians decide to jump in themselves without doing due diligence on their part, for some cheap political points.

It just bugs me when people don't consider that, and it's hard to tell if they're speaking in bad faith, have poor logical deduction skills or something else.

I'd assume if one were to check out from Amazon with say several millions of dollars of goods, there would be some phone calls being done in the back offices.

It's not. This is one of those "tell me what happens when you navigate to a URL" interview questions. What really happens when you order something off Amazon? Is there a float? Is there delayed settlement? Does Amazon at some point have to settle with another party? And the answer to all of those questions is "yes". We could continue to deconstruct your analogy, but I think the point is made.

Sibling comment made an analogy to buying a car. I believe if one really tore into the question, one might find that just about the only financial transaction that doesn't work with many similarities to the stock market is handing a fiver to the clerk at your local convenience store. (And someone that knows more about retail than I do can tell me how wrong I am about that.)

The first is a trivial item, the second an item of zero marginal cost that doesn't matter if payment fails.

A better example is settlement time of a car or house. If you buy a car maybe you can drive away today, but it takes a while before your ownership is fully registered.

The progress bar should also have ominous music like those films where the infiltrators download the contents of the secret stash of info from the computer onto some driver while the clock is running out on them being discovered.

A fairly easy way to add fraud protection would be to have T-0 or instant settlement only for previously used accounts/routing numbers. A lot of services already implement this on their end such that new bank accounts take a few days or a week to transfer but future transfers appear instant or within a day. Other options include allowing the first $X-thousand to be instant and the rest settles in T+2. This is pretty common if you get automatic deposits over a certain amount or use a phone check scanning feature.

I guess my point is that a lot of edge services (services that people interact with) already cover the T+2 delay in their own manner but that leads to confusion when some middle service provider decides to change the rules. Making the system itself adopt those strategies would just distribute the risk not increase it.

By all means allow users to set such delays if they want them, but the technology enforcing T+N really isn't a feature for customers so reframing it as such is probably a bad approach.

Give me safety over freedom, says every hegemonist when putting words in our mouths.

Your corner case scenario should not determine behavior for the market. That it is used to excuse behavior that is rammed down our throats anyway is, well, inexcusable.

If a clearing house doesn't have money to do the transactions that they are offering, then that is their problem. If they need to dip into a line of credit, then they can do so at their expense. If you "need a minute" at the end of the day to figure out what you have done during the day, then you are doing something wrong.

Do you have any personal insight into this in the EU?

Right, but I still think the comparison is good because blockchain should establish the minimum performance, and the financial industry, which can allow centralization, should be able to do much better. In terms of securities, it doesn't. Bitcoin is settled within an hour (6 confirmations), without the requirement to put up collateral that scales O(n) with the value of the transaction (and volatility).