Following its receipt of comments, on December 14, 2016, FINRA filed proposed amendments to its rules to conform them to the SEC's proposed amendments to Rule 15c6-1(a) to shorten the standard settlement cycle for most broker-dealer transactions from three business days after the trade date (T+3) to two business days (T+2).
As we mentioned in a previous post, the movement from T+3 to T+2 is generally viewed with welcoming acceptance industry-wide. According to the release, "FINRA believes that the proposed rule change supports the industry-led initiative to shorten the settlement cycle to two business days," and will provide the regulatory certainty to facilitate movement toward a T+2 settlement cycle.
The affected FINRA rules potentially include Rules: 2341 (Investment Company Securities); 11140 (Transactions in Securities "Ex-Dividend," "Ex-Rights" or "Ex-Warrants"); 11150 (Transactions "Ex-Interest" in Bonds Which Are Dealt in "Flat"); 11210 (Sent by Each Party); 11320 (Dates of Delivery); 11620 (Computation of Interest); 11810 (Buy-In Procedures and Requirements); and 11860 (COD Orders).
If the proposed amendments are approved by the SEC, FINRA will announce the effective date in a Regulatory Notice, which date would correspond with the SEC's proposed amendment to Rule 15c6-1(a).
For additional discussion of the proposed T+2 changes, see our previous articles here (NYSE), here (SEC Rule 15c6-1(a)) and here (Structured Notes).
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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