Wednesday, July 01, 2015

Commissioners Piwowar, Stein United on Move to T+2 Settlement

By Mark S. Nelson, J.D.

Commissioners Michael S. Piwowar and Kara M. Stein demonstrated solidarity in backing a proposal by the securities industry to shorten the settlement cycle from T+3 to T+2 days. The commissioners said the proposal, and feedback the Commission got from its Investor Advisory Committee, show that a faster cycle could lessen systemic risks and boost capital efficiency, according to a joint statement.

“We look forward to working with our fellow Commissioners and the staff, as well as partnering with market participants to shorten the settlement cycle as soon as possible,” said Piwowar and Stein.

A few weeks ago, the Securities Industry and Financial Markets Association (SIFMA) and the Investment Company Institute (ICI) wrote to SEC Chair Mary Jo White to press for regulatory changes that would let their members adopt a T+2 settlement cycle for secondary market transactions. The industry groups explained that the SEC and other regulators may need to update some of their rules to accommodate the new cycle. They also said the proposal does not seek changes to settlement cycles in primary markets.

Moreover, the Industry Steering Committee (ISC), in conjunction with PricewaterhouseCoopers LLP, The Depository Trust & Clearing Corporation, SIFMA, ICI and others, has issued a white paper that explains the proposal in greater detail. The ISC paper sets a timetable for achieving T+2 by Q3 2017.