The Securities and Exchange Commission Shortens Settlement Cycle

On March 22, 2017, the Securities and Exchange Commission (SEC) adopted an amendment to shorten the standard settlement cycle by one business day. Before this amendment, the execution, confirmation, clearance, and settlement would need to be completed in a three day cycle (T+3). This amended rule will apply to all transactions currently covered by the T+3 settlement cycle. These include transactions for stocks, bonds, municipal securities, exchange-traded funds, certain mutual funds, and limited partnerships that trade on an exchange.

This change was the result of new technology, products, and growing trade volume. It is believed that the shortening of the settlement cycle will lead to increased efficiency and reduce risk for the end investor by reducing the exposure to broker-dealer default prior to settlement. It will allow for investors to have more timely access to funds after executing a sale. On the flip side, it will also require a quicker payment for securities purchased.

With the implementation of the accelerated settlement cycle, firms should review their policies and procedures to see how the change in the settlement cycle will impact their operations.

Broker-dealers will be required to comply with the amended rule beginning on Sept. 5, 2017.

To assist broker-dealers, other securities professionals, and the investing public in their preparation for the implementation of a T+2 settlement cycle, the Commission has established an e-mail address – – for the submission of inquiries to SEC staff.

We would be pleased to provide further information related to this subject. For more information, contact Frank L. Varanavage, Manager, Audit & Accounting at

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