Abstract
In January 2021, the GameStop short squeeze exposed a major vulnerability in the U.S. financial regulatory system: the T+2 settlement cycle. During the GameStop event, the two-day lag between trade execution and settlement amplified volatility, strained firms like Robinhood, and ultimately limited investor participation. As part of its response, the Securities and Exchange Commission moved from two-day to one-day settlement.
But many of the conditions that led to the GameStop short squeeze persist. Existing securities laws are inadequate to contend with a rapidly evolving online, retail trading landscape. Retail investors are easy targets for bad actors and are frequently left behind during market-volatile events. Efforts to impose liability on those manipulating stocks using traditional legal enforcement mechanisms have failed. Where legal tools for accountability falter, a regulatory alternative provides a solution.
The next step is to reform the settlement process further. This Comment argues that the SEC should transition to T+0, or same-day, settlement. This transition will require a significant modernization of industry infrastructure. But by collapsing the settlement window, the market can drastically reduce risk, lower capital requirements for intermediaries, and enhance overall market stability. Regulators must embrace this shift to create a safer, more efficient marketplace for all.
Start Page
703
Recommended Citation
Schreder, Julia
(2026)
"The T+0 Imperative: Modernizing Markets by Shortening the Settlement Cycle,"
University of Chicago Legal Forum: Vol. 2025, Article 21.
Available at:
https://chicagounbound.uchicago.edu/uclf/vol2025/iss1/21