On March 22, the Securities and Exchange Commission
("Commission") adopted a rule amendment that shortens the
time by which most securities transactions effected by a
broker-dealer are required to settle. Under the amendment,
beginning September 5, 2017, most such settlements will be required
to occur by the second business day after the trade date
("T+2"), rather than by the previously-required third
business day after the trade date ("T+3").
The shortened settlement cycle will impact many securities
transactions by both retail and institutional investors. For
example, transactions in the shares of investment companies that
are traded on exchanges (e.g., ETFs and closed-end funds),
which heretofore have generally settled on T+3, will have to settle
by T+2. The same is true of some non-exchange traded mutual funds,
although most already settle on an even shorter T+1 basis.
