Wall Street is preparing to move to the 23×5 trading model. The settlement system, however, is still built around the idea that markets have a closing bell.
It’s a legacy system that doesn’t fundamentally match the extended trading hours.
The hours debate has absorbed most of the attention this year, but it’s the wrong layer to watch.
Extending the trading session doesn’t touch what happens after the trade. A stock bought at 2 AM under Nasdaq’s new Global Trading Hours still settles on the same batch cycle built for a market that used to close at 4 PM.
On-chain markets operate on another premise. Transactions get settled continuously. Delivery and payments happen in seconds rather than having to wait a day for the next settlement window.
Three Decades to Shave Four Days
US equity settlement has compressed exactly three times since the mid-1990s. T+5 became T+3 in 1995. T+3 became T+2 in 2017. T+2 became T+1 in May 2024, after a project that took SIFMA, the ICI, and DTCC roughly three years to plan and coordinate.
Each step took a single day off the cycle. Cumulatively, getting from five days to one took three decades.
As the trading day is now going to be much longer, it’ll create more opportunities to transact across time zones.
But the settlement infrastructure will continue to operate on a different clock. The result is a system that is faster than it used to be, but not yet continuous.
What This Batch Cycle Costs
Fast settlements aren’t a vanity metric.
Between execution and settlement, counterparties remain exposed to the possibility that a transaction will fail. That’s why DTCC held an average of $13.4 billion in margin every day under T+2. This was collateral posted purely to cover counterparty default risk during the gap between trade and settlement.
The move to T+1 alone is estimated to have reduced that specific margin requirement by roughly 41%.
That’s capital sitting idle for a full extra day, multiplied across the entire market, simply because settlement ran on a batch cycle instead of a continuous one.
When the markets close on Fridays, the same cost takes a more acute shape.
A trade executed on Friday afternoon remains unsettled over the weekend, until Monday morning at the earliest. The collateral behind it remains locked too.
On-chain markets don’t have to treat Saturday and Sunday as exceptions. The transaction can settle when it occurs.
DTCC is Chasing the Same Thing
DTCC understands the restrictions of T+1 settlement. In July, it ran its largest tokenization pilot, involving over 30 institutions, including the likes of JPMorgan, BlackRock, and Vanguard.
The pilot included moving tokenized equities, ETFs, and treasuries through live production trades.
JPMorgan, for instance, converted its Invesco QQQ Trust holdings into tokenized collateral and used it to satisfy CME margin requirements in real time.
DTCC plans a broader launch in October, and a connection to the Stellar network in the first half of 2027, part of what it calls a multi-chain strategy for tokenized settlement.
It’s the one institution that oversees more than $114 trillion in securities, and it’s choosing to move toward continuous settlement. The direction is the tell.
“Clear rules matter because they give market participants certainty about how they can operate,” says Shunyet Jan, Binance’s Head of Exchange and Trading. “We’ve seen across different markets that once the framework is clear, institutions have more confidence to participate and build. As tokenized markets develop alongside traditional markets, having that regulatory clarity becomes increasingly important.”
Price Discovery Link Over the Weekend
While NYSE closes on Fridays, the tokenized equity markets remain open over the weekend. But price discovery happens just as well during this period.
Weekend bStocks pricing has captured a median 92% of the eventual Monday gap, with a residual deviation of just 0.19%. That’s only possible because those trades are actually settling in real time, not merely quoting a price against a market that won’t confirm it until Monday.
A quote without settlement behind it is like a forecast. A trade that settles instantly, with the asset and the payment both moving, is a cleared position a market maker can immediately hedge, lend against, or unwind.
On Binance’s tokenized-equity market, settlement happens right away. This is the standard the T+1 era will eventually be measured against.
The T+1 Benchmark May Not Be the End
T+1 settlement was designed to solve a problem that increasingly fast markets created. Essentially, the trade settlement happened too slow relative to the trading speed.
As the traditional markets move toward 23×5 trading, a settlement system that still thinks in business days will increasingly become a visible constraint.
None of this makes T+1 obsolete overnight, or DTCC’s pilots a formality. For traditional markets, it still remains a major improvement over T+2 and T+3. Additionally, legal recognition of tokenized settlement finality, cross-network interoperability, and regulatory sign-off all still have to catch up to what the technology already does.
But it may ultimately prove to be an intermediate step.
The more important benchmark for an always-on market may not be how quickly a trade can be executed.
It may be how quickly ownership and payment can become final.
Trading has already escaped the clock. Settlement could be next.
This article was written by IL Contributors at investinglive.com.