U.S. regulators and self-regulatory organizations have been moving towards a T+2 settlement cycle for secondary market transactions. In November 2016, the NYSE took its own expected steps in this direction, with a series of proposed rule changes. The NYSE's rule filing may be found at the following link: https://www.nyse.com/publicdocs/nyse/markets/nyse/rule-filings/filings/2016/NYSE-2016-76.pdf.
To effect the T+2 settlement cycle, the NYSE would adopt a series of related rules:
- Rule 14T (Non-Regular Way Settlement Instructions);
- Dealings and SettlementsT (Rules 45–299C);
- Rule 64T (Bonds, Rights and 100-Share-Unit Stocks);
- Rule 235T (Ex-Dividend, Ex-Rights);
- Rule 236T (Ex-Warrants);
- Rule 257T (Deliveries After "Ex" Date);
- Rule 282.65T (Buy-in Procedures); and
- Section 703.02T (Part 2) of the Listed Company Manual (Stock Split/Stock Rights/Stock Dividend Listing Process).
Market participants may comment on the rule changes, in particular, as to whether any additional changes may be needed or desirable to affect the move to a shorter settlement cycle.
For a discussion of the SEC's proposed rule changes to facilitate T+2 settlements, please see: http://www.bdiaregulator.com/2016/09/twenty-three-years-later-one-day-shorter-sec-proposes-t2-rule-amendment/.
For a discussion of FINRA's related proposed rule changes, see: http://www.bdiaregulator.com/2016/03/finra-and-t2-the-rule-roll-out-begins/.
For a discussion of the potential impact of T+2 settlements on the structured products industry, please see our January 2016 issue of Structured Thoughts, which can be found at: https://media2.mofo.com/documents/160115structuredthoughts.pdf.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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