For years, financial verticals have evolved toward instant gratification, with ATM cash withdrawals, debit card purchases, electronic payments and more. But there’s one thing you still have to wait days for: your stock trade to be settled. Now Dallas-based Apex Fintech Solutions will speed that up too—with a new product launching in Q3 of this year.
Apex, which made news earlier this year when it announced plans to go public via a merger with a blank-check firm Northern Star Investment Corp. II, calls itself “the fintech for fintechs.” The company intends to give investors immediate access to funds when they sell U.S. equity securities, it said today in a release.
Customarily, investors have to wait out a two-day settlement period before accessing funds. Apex believes the required settlement period “has lagged behind” evolutions in finance, so it’s stepping up to change that.
“By streamlining the delivery of cash following the sale of securities, Apex is creating yet another tool that simplifies and modernizes the investment process for end-users,” the company said.
While Apex will continue to settle transactions under the two-day standard, it will simulate an instant settlement by giving end investors immediate access to the cash value of the trade in their accounts.
“Apex believes investing should be accessible and transparent, and technology can enable solutions to meet these objectives,” Apex CEO Bill Capuzzi said in the release. “We’ll continue to develop and provide innovative solutions to offer investors choices that facilitate their ability to invest when and how they wish.”
The product is expected to be available to Apex clients by the end of Q3 this year.
Another critic of T+2
Apex isn’t alone in looking askance at the two-day settlement period, known as T+2 for trade date plus two days. Others believe it’s more than an inconvenience—it can also entail risk.
Writing in Barron’s, Eric Noll, a former leader of Nasdaq’s U.S. exchanges and former CEO of a leading institutional agency broker-dealer, says T+2 “drives unnecessary risk in the financial system in several ways.”
For instance, all U.S. equity trades are cleared through the National Securities Clearing Corporation (NSCC), Noll writes, creating a single point of possible failure in U.S. markets.
By NSCC’s own estimate, Noll writes, “$13 billion of trapped capital would be would be released into the system every day to be used more effectively and more productively” if the settlement cycle functioned in real time or very close to it.
“This is an obvious win for all market participants,” Noll writes, “lowering risk and providing capital released into the market.”
Until that happens, investors will have to count on innovators like Apex to speed things along.
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