Stock trades pass through several phases before completion, from placing an order via a brokerage firm, to the delivery of securities versus payment. This paper sheds light on the later phases of the trading process for equity securities in US capital markets. In a continuous effort to improve the settlement process, the National Securities Clearing Corporation (NSCC) makes several substantial changes every year in the rules and regulations that govern the settlement process. This paper investigates the impacts of these changes on the efficiency of settlement using the volume of shares failed to deliver from 2004 to 2017. This paper employs an Extended Vector Autoregressive model for empirical testing. The results show a considerable impact from rule and regulation changes on the quantity of shares failed to be delivered in time for settlement. The finding of this study provides important information for regulators and investors with regards to the settlement process and investment strategies.

Conference Title

93rd Annual Conference - Western Economic Association International

Conference Country

Canada

Conference Date

June 26, 2018 - June 30, 2018

Conference Sponsor

Western Economic Association International

Additional Info

Conference Website