Sec Approves Shortened Settlement Cycle

The SEC approved an amendment to Exchange Act Rule 15c6-1 that shortens the standard settlement cycle for securities transactions. The rule change reduces the standard settlement cycle from three business days after the trade date (T+3) to two business days (T+2).

The amendment was approved by the SEC unanimously. SEC Commissioner Kara Stein called the current settlement cycle "woefully behind the times," and Acting Chair Michael Piwowar concurred: "rarely is an issue as commonsensical or broadly supported as this one."

According to the SEC Press Release and Fact Sheet, the primary purpose of the rule change is to (i) improve capital efficiency, (ii) reduce risk, and (iii) provide for a coordinated and expeditious transition to a shortened standard settlement cycle for market participants. Commissioner Stein characterized the move to a T+2 settlement cycle as a "helpful step" in reducing "counterparty default risk, market risk, liquidity risk, credit risk and