SEC Adopts T+2 Settlement Cycle for Securities Transactions
Today, the SEC adopted an amendment to shorten the standard settlement cycle for most broker-dealer securities transactions by one day.
Currently, the standard settlement cycle for most transactions is three business days, known as T+3. The amended rule shortens the settlement cycle to two business days, T+2.
The amended rule is designed to enhance efficiency, reduce risk, and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle.
“As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people,” said SEC Acting Chairman Michael Piwowar. “The SEC remains committed to ensuring that U.S. securities regulation is reflective of modern times, and in shortening the settlement cycle by one day we aim to increase efficiency and reduce risk for market participants.”
Broker-dealers will be required to comply with the amended rule beginning on Sept. 5, 2017.