SEC Commissioner Piwowar Calls on SEC to Issue T+2 Proposal Immediately
Commentary by Steven Lofchie
SEC Commissioner Michael S. Piwowar asserted that the delay in issuing a proposal to establish a two-business-day settlement cycle after the date of a trade's execution ("T+2") is "wholly unacceptable."
Commissioner Piwowar stated that a T+2 settlement cycle would (i) enhance the efficiency of securities markets, (ii) decrease financial risks to retail investors and market participants, and (iii) conform trade processing in the United States to that of other global markets. He noted that the SEC's most recent Regulatory Flexibility Agenda specified an action date of June 2016 for a T+2 proposal, and argued that the failure to meet that date has "left market participants wondering whether the [SEC] is truly committed to shortening the settlement cycle."
Commissioner Piwowar expressed his concern:
The delay in issuing a T+2 proposal is wholly unacceptable. That the rulemaking has languished is not only frustrating to me personally, but is detrimental to efforts to improve investor protection.
Commentary
Reducing settlement times would do more to reduce systemic risk for retail investors than most of the measures imposed by Dodd-Frank. Sometimes, the most boring actions are often the most meaningful; the SEC should recognize the significance of this simple request.