US SEC supports T+2 settlement cycle 08 October 2015Washington DC Reporter: Mark Dugdale
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An industry coalition has welcomed a letter from the head of the Securities and Exchange Commission (SEC) supporting the move to a two-day settlement cycle (T+2) in the US.
The T+2 Industry Steering Committee is pushing for a move to T+2 in the US to foster greater certainty, safety and soundness in capital markets, as well as reduce counterparty risk and procyclical margin and liquidity demand across the industry.
SEC chair Mary Jo White wrote to steering committee members the Securities Industry and Financial Markets Association (SIFMA) and Investment Company Institute (ICI) in September, saying: “For these and other reasons, it is in my view incumbent upon all segments of the securities industry, including, where needed, the regulatory community, to work together expeditiously on this important matter.”
Tom Price, co-chair of the steering committee and managing director of operations, technology and business continuity planning at SIFMA, commented: “Obtaining regulatory support for the move to T+2 is critical and we applaud the SEC for their leadership and support in this major initiative to strengthen our financial system.”
The steering committee is pushing for a move to T+2 in the US by Q3 2017. It issued a whitepaper in June outlining the proposed timeline and work that needs to be done to complete the project.
“Moving to a shorter settlement cycle will help improve the overall efficiency of securities markets, align the US with other global markets and promote financial stability,” reaffirmed Marty Burns, co-chair of the steering committee and chief industry operations officer at ICI.
The SEC, as well as other regulators and self-regulatory organisations, need to coordinate to implement or approve the regulatory changes that are required to support the move to T+2 in the targeted timeframe.
The steering committee also plans to begin developing industry test and implementation plans, and advises industry participants to begin assessing the work needed for internal builds.
Industry-wide testing is expected to begin in 2017 in support of the Q3 2017 implementation of T+2, according to the steering committee.
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