SEC Proposes Changes to Clearance and Settlement of Securities

The Securities and Exchange Commission (SEC) has issued a proposed rule “Shortening the Securities Transaction Settlement Cycle”. The SEC notes in a press release that it is proposing to shorten the settlement cycle for most broker-dealer transactions from two business days after the trade date (T+2) to one business day after the trade date (T+1). The changes are designed to improve efficiency and reduce transaction risks. The proposal includes rules directed at broker-dealers and investment advisers that would shorten the process of confirming and affirming the trade information necessary to prepare transactions for settlement. The proposal solicits comments on challenges associated with and recommendations for achieving a same-day settlement cycle.

The SEC will accept public comments for the longer of 1) 60 days following the release of the proposed rule on the SEC’s website, or 2) 30 days following the publication of the proposed rule in the Federal Register.