SIFMA and ICI Submit Comments to SEC Regarding Regulatory Initiatives to Shorten Settlement Cycles

In comments filed with the SEC, SIFMA and the Investment Company Institute (together, the "Associations") voiced support for efforts by the financial services industry to shorten settlement cycles for equities, corporate and municipal bonds, unit investment trusts, and financial instruments composed of such products that are traded on the secondary market. According to the Associations, shortening the settlement cycle to the second business day after the trade date ("T+2") rather than the third day will increase the overall efficiency of the securities market and promote financial stability.

The Associations stated that they are working with members of the industry and various SROs to prepare market participants for a shorter settlement cycle by identifying operational, technological and other changes that may be required.

In keeping with these efforts, the Associations identified several SEC rules that must be amended before the industry can implement the T+2 settlement period. The most important of these rules is Exchange Act Rule 15c6-1(a), which the Associations said must be amended to require a T+2 settlement period expressly, in order to ensure the industry-wide adoption of the shorter settlement cycle. The Associations also identified a number of other rules that require amendment, including FINRA rules regarding (i) payment on delivery or collection on delivery transactions and (ii) "ex-dates" for corporate actions, Federal Reserve Board Regulation T, Regulation SHO and SEC Rule 15c3-3(m).

See: SIFMA and ICI Comment Letter.