Settlement Cycles
Market resiliency is a top priority for SIFMA and its members. The successful transition to a T+1 settlement cycle marks a major milestone in strengthening the efficiency and stability of the U.S. capital markets
On May 28, 2024, the U.S. financial industry moved to T+1 settlement for equities, corporate bonds, and municipal bonds—one business day after the trade date. Canada transitioned on May 27, 2024, in coordination with the U.S. effort.
This industry-wide initiative – coordinated by SIFMA, the Depository Trust & Clearing Corporation (DTCC), and the Investment Company Institute (ICI) – engaged thousands of operations professionals across firms and utilities. Together, they delivered one of the most significant post-trade transformations in decades.
The move to T+1 also sets the stage for a broader global transition. Other major markets, including the United Kingdom and European Union, plan to adopt T+1 settlement by October 2027, reflecting a shared international commitment to enhancing operational efficiency, reducing systemic risk, and improving market resiliency worldwide.
Key Focus Areas
Strengthening Market Resiliency
Shortening the settlement cycle reduces counterparty and credit risk across the system. By moving to T+1, the industry has lowered exposure to unsettled trades and improved the ability to withstand market stress.
Enhancing Liquidity and Efficiency
Faster settlement frees up capital sooner, allowing firms to redeploy it efficiently and enhance market liquidity. The transition also modernized key post-trade systems, fostering innovation and automation across the industry.
Promoting Global Coordination
SIFMA continues to collaborate with regulators, clearing agencies, and global counterparts to align settlement practices worldwide—particularly as the UK and EU prepare for their own transitions to T+1 in October 2027.
Supporting Industry Readiness
Through the T+1 Playbook, Command Center, and educational resources, SIFMA has led member outreach, scenario planning, and communication across firms to ensure smooth adoption and operational continuity.
Early Benefits
Initial results demonstrate measurable improvements in efficiency and risk reduction:
- Clearing Fund Reduction: NSCC’s Clearing Fund decreased by $3.7 billion (29%) from the prior quarter average.
- Lower Fail Rates: The first day of T+1 saw a 1.90% CNS fail rate, down from 2.01% under T+2.
- Higher Affirmation Rates: 5% of trades affirmed by DTC’s 9:00 p.m. ET cutoff—up from 73% in January 2024.
How We Got Here
Efforts to shorten settlement cycles have been decades in the making. The U.S. moved to T+3 from T+5 in 1995 and from T+3 to T+2 in 2017. In 2020, as part of ongoing efforts to decrease risk in the system, SIFMA, DTCC and ICI – the same industry partners that worked on previous settlement cycle changes – started discussions to move to T+1 and formally initiated the effort in early 2021. In February 2022, the SEC issued a proposal to accelerate settlement to T+1, and that proposal was adopted as a final rule the following year.
Key Resources
- T+1 Command Center (SIFMA)
- T+1 Playbook (SIFMA, DTCC, ICI)
- T+1 Settlement Cycle Booklet (SIFMA, CCMA, ISDA)
- T+1 Dividend Processing FAQs (SIFMA)
- T+1 Conversion Guide (DTCC)
The Bottom Line
The move to T+1 settlement is a defining achievement in post-trade modernization. It strengthens liquidity, reduces systemic risk, and enhances operational efficiency—further reinforcing the resiliency and global competitiveness of U.S. capital markets.
