Next-day settlement refers to a financial transaction process where the final transfer of funds and assets occurs on the business day following the trade date. This means that while a transaction is agreed upon today, the actual exchange of value is completed by the end of the next trading day. This standard practice in traditional markets allows for necessary administrative and risk management procedures. It contrasts with instantaneous or real-time settlement mechanisms.
Context
In the digital asset news, next-day settlement is often contrasted with the near-instantaneous settlement capabilities offered by many blockchain networks. The efficiency gains of blockchain technology present a potential for reducing settlement times from days to minutes or seconds. Discussions often focus on how digital assets could disrupt traditional financial infrastructure by enabling faster, more efficient settlement processes, particularly for cross-border payments and securities trading.
This integration creates a real-time, low-friction payment rail, reducing cross-border transaction costs by 50% and improving enterprise working capital velocity.
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