T+2 Industry Steering Committee Releases White Paper Regarding Proposed Timeline for T+2 Settlement Cycle

The T+2 Industry Steering Committee, a group comprised of members from across the securities industry, released a white paper that outlines the actions and timeline required to shorten the settlement cycle for equities, corporate and municipal bonds, and unit investment trust trades in the United States from three to two days. Their goal is to migrate to the new timeframe by the third quarter of 2017.

The ISC was organized by the Depository Trust Clearing Corporation and comprises members from across the securities industry, including SIFMA and the Investment Company Institute.

According to the ISC, shortening the U.S. settlement cycle for equities, corporate and municipal bonds, and unit investment trust trades from the current three-day settlement cycle to T+2 will provide a number of benefits, including reducing counterparty risk, decreasing clearing capital requirements, reducing pro-cyclical margin and liquidity demands, and increasing global settlement harmonization. The 2017 implementation timeframe was established based on industry analyses, and is contingent on "obtaining regulatory certainty in a timely manner and successfully completing industry-wide testing."

See: ISC White Paper, "Shortening the Settlement Cycle: The Move to T+2."Related news: SIFMA and ICI Submit Comments to SEC Regarding Regulatory Initiatives to Shorten Settlement Cycles (June 18, 2015).