Cash & Liquidity ManagementPaymentsClearing & SettlementSEC action to facilitate a shorter settlement cycle welcomed

SEC action to facilitate a shorter settlement cycle welcomed

The T+2 Industry Steering Committee (T+2 ISC) has welcomed recent action by the Securities and Exchange Commission (SEC) to propose a rule change that will facilitate the move to a two-day settlement cycle. The proposed rule change will provide regulatory certainty necessary to help the financial services industry achieve its goal of moving to a two-day settlement cycle by September 2017.

Shortening the US settlement cycle for equities, corporate and municipal bonds, and unit investment trust (UIT) trades from the current three-day settlement cycle, or T+3, to T+2 will provide a number of benefits, including reducing operational, systemic and counterparty risk, lowering liquidity needs, and limiting procyclicality, while aligning the US with other T+2 settlement markets across the globe. A shorter settlement cycle will enhance US market structure, improving safety and efficiency for investors.

“We commend the SEC for taking proactive measures to facilitate a two-day settlement cycle by September 2017,” said Tom Price, co-chair of the T+2 ISC, and managing director, operations, technology & business continuity planning, SIFMA. “This is a fundamental change to US market structure, and the success of this effort relies on robust communications, planning, execution and collaboration between the industry and regulators.”

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