Why Traders — and Trump — Should Thank the SEC

Amid the recent market turmoil fueled by Donald Trump’s trade war rhetoric, things could have been much worse. Ironically, both investors and the Trump administration owe a silent debt of gratitude to a longtime antagonist of the former president: former SEC Chair Gary Gensler.

T+1 Settlement: A Quiet Market Hero

Despite extreme price swings and record trading volumes in the past two weeks, markets have avoided the kind of severe liquidity crises seen in past periods of volatility. This stability is partly thanks to a fundamental but underappreciated shift in the U.S. financial infrastructure — the move to T+1 trade settlement, implemented last year.

Modern trading platforms may give the illusion of instantaneous execution, but behind the scenes, it still takes time to actually exchange securities and cash. This time delay, once set at two days (T+2), was a vulnerability exposed during the 2021 meme-stock frenzy when brokers like Robinhood had to halt trades due to margin calls from clearinghouses.

Gensler’s Regulatory Push Pays Off

In response, the SEC under Gensler mandated that U.S. stocks and corporate bonds settle within one business day. This reduced the collateral required from traders and minimized the risk of counterparty default — especially during turbulent times. The move helped prevent a ripple effect of liquidity shortages, the kind that plagued markets during the near-collapse of Credit Suisse in 2023.

Although it’s impossible to know which firms might have faced trouble under the old T+2 regime, the industry has so far welcomed the increased stability and transparency that T+1 brings. The preparation leading up to the change also led to improved risk monitoring and better communication across market participants.

Global Implications and Regulatory Reflections

The U.S. success with T+1 serves as a model for other major markets. The EU, Switzerland, and the UK are planning to follow suit by 2027 — and they would be wise to move swiftly. For the U.S., it’s a reminder that smart, proactive regulation can strengthen markets rather than stifle them.

Though Gensler didn’t invent faster settlement, he championed its implementation in the U.S., leaving other global markets with little choice but to catch up. This is a powerful rebuttal to claims that regulators exist only to burden banks.

Conclusion

The smoother functioning of markets during recent volatility stands as a quiet win for regulation done right. And while political tensions remain, the success of T+1 settlement is a reminder that sometimes, the best offense is a little foresight — even from an unlikely source.

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