On March 22, the Securities and Exchange Commission approved a rule that will shorten the standard settlement cycle for most securities transactions to T+2 from T+3. Broker-dealers will be required to comply with the shorter settlement cycle beginning on Sept. 5.
“Transition to a T+2 settlement cycle will reduce by one business day the time horizon for risk exposures as well as for potential liquidity pressures, which should yield other benefits for market participants and the clearance and settlement infrastructure as a whole,” Michael Piwowar, the SEC’s acting chairman, said in a statement.
The main impact for derivatives market participants will be on exercises and assignments for equity options. To help market participants prepare, the OCC, the clearinghouse for U.S. equity options exchanges, has set up a schedule of tests taking place over the next several months.
