US goes to two-day settlement cycle
September 5, 2017

The Depository Trust & Clearing Corporation (DTCC), Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (SIFMA), on behalf of the T+2 Industry Steering Committee (T+2 ISC), today oversaw the transition to a standard settlement timeframe of trade date plus two days (T+2) for in-scope securities. This includes US equity, corporate and municipal bond, and unit investment trust (UIT) trades, reducing operational and systemic risks to the US marketplace.

Beginning today, trades in the affected securities will settle in two business days instead of the previous three-day cycle, providing significant benefits, including reduced market and counterparty risk, increased financial stability and improved safety and efficiency for investors and market participants. The shorter settlement timeframe also aligns the US with other major markets globally that use T+2 settlement, providing an increased level of global settlement harmonization across jurisdictions and regions.

The transition is the culmination of a multi-year broad-based industry effort. In 2014, an industry consensus formed around the benefits of T+2. DTCC organized the T+2 ISC, co-chaired by ICI and SIFMA, to oversee and advance the initiative. The T+2 ISC's working group and sub-groups ultimately involved approximately 600 professionals from all impacted segments of the industry, establishing an industry-wide implementation plan that defined the operational framework and developed guides for market participants.

Regulatory action has been integral to the industry's T+2 initiative. The SEC finalized rule changes to facilitate the shorter settlement cycle on March 22, 2017, and nine other regulators and self-regulatory organizations (SROs) have also taken action. In total, nearly 50 rules were addressed to help make T+2 a reality.

DTCC estimates the lower levels of risk associated with a shorter settlement cycle will reduce the average daily capital requirements for clearing trades through DTCC's National Securities Clearing Corporation (NSCC) by approximately 25 percent, or $1.36 billion.

Murray Pozmanter, Head of Clearing Agency Services and Global Operations and Client Services at DTCC said: "The move marks the most significant change to the market's settlement cycle in over 20 years. A collaborative industry-driven effort with strong support from regulators, the T+2 initiative has achieved its common goal, which will ultimately further reduce risks and costs for the benefit of the investors and market participants."

"Foresight, leadership, and collaboration in the financial industry have resulted in the transformational move to T+2," said Marty Burns, Chief Industry Operations Officer at ICI, and Co-Chair of the T+2 ISC. "Market participants are pleased with the strong support of regulators in achieving this goal, but it is worth noting that the industry initiative toward a shorter settlement cycle took root and progressed without regulatory mandates. Without question, the most significant value of T+2 is its effect of reducing settlement risks and enhancing market resiliency for stakeholders and, most importantly, investors."





This site, like many others, uses small files called cookies to customize your experience. Cookies appear to be blocked on this browser. Please consider allowing cookies so that you can enjoy more content across globalcustody.net.

How do I enable cookies in my browser?

Internet Explorer
1. Click the Tools button (or press ALT and T on the keyboard), and then click Internet Options.
2. Click the Privacy tab
3. Move the slider away from 'Block all cookies' to a setting you're comfortable with.

Firefox
1. At the top of the Firefox window, click on the Tools menu and select Options...
2. Select the Privacy panel.
3. Set Firefox will: to Use custom settings for history.
4. Make sure Accept cookies from sites is selected.

Safari Browser
1. Click Safari icon in Menu Bar
2. Click Preferences (gear icon)
3. Click Security icon
4. Accept cookies: select Radio button "only from sites I visit"

Chrome
1. Click the menu icon to the right of the address bar (looks like 3 lines)
2. Click Settings
3. Click the "Show advanced settings" tab at the bottom
4. Click the "Content settings..." button in the Privacy section
5. At the top under Cookies make sure it is set to "Allow local data to be set (recommended)"

Opera
1. Click the red O button in the upper left hand corner
2. Select Settings -> Preferences
3. Select the Advanced Tab
4. Select Cookies in the list on the left side
5. Set it to "Accept cookies" or "Accept cookies only from the sites I visit"
6. Click OK

The Depository Trust & Clearing Corporation (DTCC), Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (SIFMA), on behalf of the T+2 Industry Steering Committee (T+2 ISC), today oversaw the transition to a standard settlement timeframe of trade date plus two days (T+2) for in-scope securities. This includes US equity, corporate and municipal bond, and unit investment trust (UIT) trades, reducing operational and systemic risks to the US marketplace.

Beginning today, trades in the affected securities will settle in two business days instead of the previous three-day cycle, providing significant benefits, including reduced market and counterparty risk, increased financial stability and improved safety and efficiency for investors and market participants. The shorter settlement timeframe also aligns the US with other major markets globally that use T+2 settlement, providing an increased level of global settlement harmonization across jurisdictions and regions.

The transition is the culmination of a multi-year broad-based industry effort. In 2014, an industry consensus formed around the benefits of T+2. DTCC organized the T+2 ISC, co-chaired by ICI and SIFMA, to oversee and advance the initiative. The T+2 ISC's working group and sub-groups ultimately involved approximately 600 professionals from all impacted segments of the industry, establishing an industry-wide implementation plan that defined the operational framework and developed guides for market participants.

Regulatory action has been integral to the industry's T+2 initiative. The SEC finalized rule changes to facilitate the shorter settlement cycle on March 22, 2017, and nine other regulators and self-regulatory organizations (SROs) have also taken action. In total, nearly 50 rules were addressed to help make T+2 a reality.

DTCC estimates the lower levels of risk associated with a shorter settlement cycle will reduce the average daily capital requirements for clearing trades through DTCC's National Securities Clearing Corporation (NSCC) by approximately 25 percent, or $1.36 billion.

Murray Pozmanter, Head of Clearing Agency Services and Global Operations and Client Services at DTCC said: "The move marks the most significant change to the market's settlement cycle in over 20 years. A collaborative industry-driven effort with strong support from regulators, the T+2 initiative has achieved its common goal, which will ultimately further reduce risks and costs for the benefit of the investors and market participants."

"Foresight, leadership, and collaboration in the financial industry have resulted in the transformational move to T+2," said Marty Burns, Chief Industry Operations Officer at ICI, and Co-Chair of the T+2 ISC. "Market participants are pleased with the strong support of regulators in achieving this goal, but it is worth noting that the industry initiative toward a shorter settlement cycle took root and progressed without regulatory mandates. Without question, the most significant value of T+2 is its effect of reducing settlement risks and enhancing market resiliency for stakeholders and, most importantly, investors."



Free subscription - selected news and optional newsletter
Premium subscription
  • All latest news
  • Latest special reports
  • Your choice of newsletter timing and topics
Full-access magazine subscription
  • 7-year archive of news
  • All past special reports
  • Newsletter with your choice of timing and topics
  • Access to more content across the site