SEC Finalizes Changes to Clearance and Settlement of Securities

The Securities and Exchange Commission (SEC) has issued a final rule “Shortening the Securities Transaction Settlement Cycle.” The SEC notes in a press release that it has adopted rule changes to shorten the settlement cycle for most broker-dealer transactions from two business days after the trade date (T+2) to one business day after the trade date (T+1). The changes are designed to improve efficiency and reduce transaction risks. The final rules will also require a broker-dealer to either enter into written agreements or establish, maintain, and enforce written policies and procedures reasonably designed to ensure the completion of allocations, confirmations, and affirmations as soon as technologically practicable and no later than the end of trade date.

The final rule will become effective 60 days after publication in the Federal Register. The compliance date for the final rules is May 28, 2024.