T+2 Trade Settlement on Regulatory Horizon

Based upon a public statement issued by SEC Commissioner Michael S. Piwowar and Commissioner Kara M. Stein earlier this week,  it appears that that the plan to move from a three-day (T+3) trade settlement cycle to a two-day (T+2) trade settlement cycle is closer to being implemented. In the release, the Commissioners applauded industry’s leadership in seeking changes and looked forward to working with their fellow Commissioners and the staff to shorten the settlement cycle as soon as possible. As Piwowar is Republican and Stein in Democratic, it appears that the proposal now has bipartisan support.
The public statement follows the encouragement for the proposal given earlier this year by the Commission’s Investor Advisory Committee for the Commission and market participants to move forward on reducing the settlement cycle, which they believed would improve investor protections and reduce systemic risks; and the recent issuance of a white paper  titled “Shortening the Settlement Cycle: The Move to T+2”. The white paper was issued by financial market participants and outlines the timeline and actions required to achieve T+2 by the 3rd quarter 2017.