SEC Adopts T+2 Settlement Cycle: SEC Amends Rule 15c6-1, Requiring Settlement of Securities Transactions in Two Business Days Following Trade Date

Sullivan & Cromwell LLP - March 28, 2017

The SEC has adopted an amendment to Exchange Act Rule 15c6-1(a) to shorten the standard settlement cycle for most securities transactions effected by a broker-dealer from T+3 to T+2.  The amendment does not change the settlement cycle for securities sold in cash only firm commitment underwritings and still permits parties to affirmatively contract for a longer settlement.  However, the SEC is not amending other SEC rules that key off the “settlement date”.  As a result, the move to a shortened settlement cycle will have ancillary consequences for how market participants comply with certain rules.  The amendment will go into effect on September 5, 2017.