On February 15, 2023, the Securities and Exchange Commission (SEC) adopted a set of rule amendments and new rules to facilitate the shortening of the standard settlement cycle for most broker-dealer transactions from two business days after the trade date (or T+2) to one business day after the trade date (or T+1).
The compliance date for the T+1 timeline is next Tuesday, May 28, 2024 – immediately after Memorial Day. Yesterday, SEC Chair Gensler issued a statement on the upcoming implementation date.
The SEC originally established a standard settlement cycle of three business days (or T+3) for most securities transactions in 1993. In 2017, the SEC shortened the standard settlement cycle from T+3 to T+2.
For issuers and offerings, involved parties can still agree to a longer settlement cycle for firm commitment underwritten offerings. Also, the default timeline for offerings that price after 4:30 p.m. Eastern will be T+2, though it is expected the majority of equity transactions will close one day after trading begins.
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