edit: immediate settlement is profoundly beneficial for a brokerage. imagine a single trade on the robinhood app, there is counterparty risk between the retail

edit: immediate settlement is profoundly beneficial for a brokerage. imagine a single trade on the robinhood app, there is counterparty risk between the retail trader and rh and there is a separate counterparty risk between rh and the marketmaker. the two risks perfectly offset at the point of trade, but deteriorate as the market moves further away from the trade price. over several days, the loss probability can become completely lopsided. under instant settlement conditions, the counterparty risk is neutralized immediately. as a side note, the ficc (which is the fixed income part of the dtcc) already does intraday matching. this is not, as i understand it, exactly settlement, but a pure flow brokerage, lets say, can net down their two-way exposures to reduce margin. this mollified the margining requirements surge in march 2021 when gov bond vol increased 3-4x.