About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

US Reduces Settlement Timeframe from T+3 to T+2 Effective Immediately

Subscribe to our newsletter

The US T+2 Industry Steering Committee has achieved its objective of reducing settlement time to trade data plus two days (T+2) for securities including US equity, corporate and municipal bonds, and unit investment trust trades. The settlement cycle was last changed in 1995 from T+5 to T+3 and brings the US in line with the EU, which moved to T+2 settlement in January 2015.

The steering committee was set up by DTCC in 2014 and is co-chaired by the Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (Sifma). The reduction in settlement time is expected to reduce market and counterparty risk, increase financial stability and improve safety and efficiency for investors and market participants. The alignment of the US settlement timeframe with other major markets that use T+2 settlement also provides a step towards global settlement harmonisation.

The SEC finalised rule changes to facilitate the shorter settlement cycle in March 2017, and nine other regulators and self-regulatory organisations have also taken action. DTCC estimates the lower levels of risk associated with a shorter settlement cycle will reduce the average daily capital requirements for clearing trades through its DTCC National Securities Clearing Corporation by approximately 25%, or $1.36 billion.

Murray Pozmanter, head of clearing agency services and global operations and client services at DTCC, comments: “The US move to a T+2 settlement cycle 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.”

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Regulatory change management – challenges, solutions and case studies

Regulatory change has become part of the fabric of capital markets. It has also become increasingly complex as more regulations are introduced, significant amendments are made frequently, and small changes are made on a rolling basis – the whole made more difficult by jurisdictional interpretation and the UK’s amended regulatory regime post Brexit. If keeping...

BLOG

Challenges of the New Regulatory Landscape: Data Management Summit London Preview

The regulatory landscape for financial institutions has rarely been in greater flux than now, placing new challenges on the technology and data that will be critical to satisfying the requirements of overseers. While digital innovations are offering organisations the opportunity to meet their compliance obligations with greater accuracy and efficiency, they are also encouraging regulators...

EVENT

TradingTech Summit MENA

The inaugural TradingTech Summit MENA takes place in November and examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions in the region.

GUIDE

Enterprise Data Management, 2010 Edition

The global regulatory community has become increasingly aware of the data management challenge within financial institutions, as it struggles with its own challenge of better tracking systemic risk across financial markets. The US regulator in particular is seemingly keen to kick off a standardisation process and also wants the regulatory community to begin collecting additional...