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Thanks for the background info. Why can't the database be updated ~instantly though? Is it just because of legacy systems that handle settlement in periodic (da

Thanks for the background info. Why can't the database be updated ~instantly though? Is it just because of legacy systems that handle settlement in periodic (daily?) batches? Also, couldn't a broker eliminate this risk by just making assets "unavailable to trade" until they've been settled? Granted, I understand why brokers wouldn't want to do that under normal circumstances, but it seems like something they should be able to enable when liquidity becomes a problem. To me, "Your cash can't be spent yet because the TSLA sale you just made hasn't settled" would seem a lot more understandable than "We're halting GME purchases".

alexpotato 6y ago
> Why can't the database be updated ~instantly though? Is it just because of legacy systems that handle settlement in periodic (daily?) batches? The legacy systems reason is a big one. There are banks with mainframes built in the 80's as part of the critical infrastructure. Another reason is that everyone doesn't communicate directly with the main clearing house. e.g. brokers clear with other brokers who then clear with the clearing house etc. > To me, "Your cash can't be spent yet because the TSLA sale you just made hasn't settled" would seem a lot more understandable than "We're halting GME purchases". There have been interesting solutions to disputes. e.g. I think it was NYMEX that had a rule for floor traders along the lines of "If Trader A and Trader B have a clearing issue, NEITHER of them gets to trade till it is taken care of." Given that these traders traded with each other multiple times a day coupled with they were making no money during this dispute, both parties were incentivized to come to an agreement.