The SEC voted to propose an amendment to shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date ("T+3") to two business days after the trade date ("T+2").
The SEC explained that the proposal would "prohibit a broker-dealer from entering into a contract for the purchase or sale of a security (other than an exempted security, government security, municipal security, commercial paper, bankers' acceptances, or commercial bills) that provides for payment of funds and delivery of securities later than two business days after the trade date, unless otherwise expressly agreed to by the parties at the time of the transaction." The SEC asserted that "[s]hortening the standard settlement cycle to T+2 could result in a further reduction of credit, market, and liquidity risk for all U.S. market participants, which in turn could reduce systemic risk for U.S. market participants."
In his statement at the open meeting, SEC Commissioner Michael S. Piwowar emphasized that he "enthusiastically support[s]" the proposal and he even urged regulators to consider a one-day trade settlement cycle "in the future."
Comments on the proposed amendment must be submitted by 60 days following its publication in the Federal Register.
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