The Effects of Regulatory Reform on Trade Settlement Failures in U.S. Equity Markets.
Publication Type
Conference Paper

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
Conference Date
June 26, 2018 - June 30, 2018
Conference Sponsor
Western Economic Association International
Additional Info
Conference Website