May 28 (Reuters) - U.S. trading moved to a shorter

settlement on Tuesday, which regulators hope will reduce risk

and improve efficiency in the world's largest financial market

but may temporarily lead to a rise in transaction failure for

investors.

Here are some reactions:

JEFF NAYLOR, CHIEF INDUSTRY OPERATIONS OFFICER AT THE INVESTMENT

COMPANY INSTITUTE:

"ICI has worked closely with our industry partners and

regulators to ensure a seamless transition to a T+1 settlement

cycle. To date, all T+1 implementation activities have been

completed according to plan. We are now operating in a T+1

settlement cycle and are monitoring transaction flow. Wednesday

is the last day market participants will settle T+2 transactions

coupled with the first day of finalizing T+1 trades, and we are

confident we will continue to see smooth execution.

"The US T+1 Command Center, co-led by ICI and SIFMA,

operated throughout the weekend to confirm readiness among major

market participants including DTCC, custodian banks, major

broker/dealers, buy-side participants, and trading and

infrastructure service providers to the industry. Additionally,

ICI and SIFMA updated regulators throughout the weekend

including the SEC, Federal Reserve Bank of NY, OCC, FINRA, and

Treasury."

SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION (published

on website)

"Over the weekend, SIFMA's T+1 Command Center was fully

engaged with the industry, discussing among the designated

participants such topics as conversion status information,

transparency into the activity of other participants, and issue

identification and socialization. That engagement will continue

throughout the week. The industry has taken steps to be ready

when the U.S. markets open today, which is the effective date of

the transition to T+1 settlement, and we look forward to

continued progress towards T+1 and helping investors and the

industry realize the benefits of this change."

NICK WOOD, HEAD OF EXECUTION AT MILLTECHFX AND MILLENNIUM

GLOBAL:

"The shift to T+1 is expected to reduce settlement risk but

comes with significant operational obstacles in the FX market.

For example, in Europe, it's estimated that $50bn-$70bn of daily

FX flows will no longer be able to settle via CLS, a key

component in managing settlement risk.

"Given that CLS has decided it won't be changing the current

cut-off times, after the US equity market closes there will be a

much tighter window of just two hours to process transactions,

execute the required FX trades to ensure dollars are available

and submit the trades to CLS.

"Those without a local US presence and who would have

historically executed the required FX trades the following

morning may have additional unintended costs. They could end up

extending execution and operational coverage into the late

evening which will potentially add to staffing costs. This may

also add to execution costs as they will be transacting during

illiquid hours. Alternative solutions such as pre-funding could

bring additional funding costs and utilizing their custodian due

to workflow simplicity may bring higher costs via fees plus

reduced transparency. Beyond this, the only other consideration

would be to accept settlement outside of CLS."

ERIC HUTTMAN, CEO OF MILLTECHFX:

"We expect most firms to make changes to staffing and

explore automating or even outsourcing, but with same-day

settlement looking increasingly likely, there is a significant

amount of work ahead for FX operations professionals to ensure

optimal workflows and a smooth transition."

BNY MELLON (published on website)

"We welcome this positive move to reduce settlement risk and

improve liquidity across the market. We will continue to closely

monitor the transition and keep this site updated."

ALEJANDRO FÉLIX, PRESIDENT OF THE MEXICAN ASSOCIATION OF STOCK

INSTITUTIONS' ADMINISTRATION COMMITTEE

"We live in a world that's ever more online. In an era where

everything is characterized by its immediacy, it no longer made

much sense to continue with last century's settlement

mechanisms."

"On the one hand, there is such a high correlation between

the American market and the Mexican market and, on the other,

there is an enormous appetite among the investing public for

stocks listed in the United States, which makes it very

important to have the same settlement cycle"