Following a multi-year broad-based industry initiative, on September 5, 2017 the financial services industry successfully transitioned to a shortened standard settlement time frame of trade date plus two days (T+2) for in-scope securities. A fundamental change to existing market practices and the most significant in two decades, the new two-day settlement cycle reduces risk and enhances U.S. market structure by improving market safety and providing efficiency for investors.
Previously, the securities industry completed settlement for equities, corporate and municipal bonds, unit investment trusts, and financial instruments comprised of these products on the third business day after a trade is executed (T+3). The industry moved to T+3 in 1995, after the U.S. Securities and Exchange Commission (SEC) reduced the settlement cycle from T+5.
Shortening the U.S. settlement cycle provides several benefits including reducing operational, systemic and counterparty risk and lowering liquidity needs, while aligning the U.S. with other T+2 settlement markets across the globe. A shorter settlement cycle enhances market structure by improving safety and efficiency for investors. SIFMA, as co-chair of the T+2 Industry Steering Committee (T+2 ISC) together with the Investment Company Institute (ICI) and The Depository Trust & Clearing Corporation (DTCC), coordinated efforts with the Industry Working Group (IWG) and Sub-Working Groups (SWGs) to assess the scope, requirements, and changes needed to facilitate the implementation of T+2 and ensure a successful transition.