Settle down – But are we prepared?
This paper examines the consequences of the US transition from a T+2 to a T+1 settlement cycle. We assess whether the reform enhanced market liquidity, increased settlement frictions, and whether effects varied across firm types and time horizons. Using a Difference-in-Differences design with matched US–EU firm-level data, we evaluate short-, mid-, and long-term impacts on three liquidity proxies:
