SEC Adopts T+2 Settlement Cycle for Securities Transactions

The Securities and Exchange Commission (“SEC”) has adopted an amendment to shorten the standard settlement cycle for most broker-dealer securities transactions by one business day (“T+2”).  Currently, the standard settlement cycle for these transactions is three business days, known as T+3.  The amendment to Rule 15c6-1(a) shortens the settlement cycle to two business days.

The amended rule has been in discussions since 2015 and 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“As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people,” said SEC Acting Chairman Michael Piwowar.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.”

The compliance date for broker-dealers to begin complying with the amended rule is Sept. 5, 2017.

The SEC has established an e-mail address for the submission of inquiries to SEC staff T2sellement@sec.gov to assist broker-dealers, other securities professionals and the investing public in their preparation for the implementation of a T+2 settlement cycle.