NEW RULES, PROPOSED RULES AND GUIDANCE
SEC Adopts T+2 Settlement Cycle for Securities Transactions,
Shortening Timing Mismatch for Mutual Funds
On March 22, 2017, the SEC adopted an amendment to the
settlement cycle rule under the Securities Exchange Act to shorten
the standard settlement cycle for most broker-dealer securities
transactions from three business days after the trade date (i.e.,
T+3) to two business days after the trade date (i.e., T+2). The
SEC's adopting release for the rule amendment cites comments on
the T+2 proposing release (published on September 28, 2016),
including from the Investment Company Institute (ICI), that noted,
in the context of mutual funds, a shortened settlement cycle would
reduce the timing mismatch and funding gap between settlement of a
mutual fund's portfolio securities (which settle on T+3) and
the settlement of shares issued to investors through the mutual
fund itself (which generally settle on T+1), improving
