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SEC Adopts Rules to Shorten the Securities Settlement Cycle

February 23, 2023 Download PDF

The SEC has adopted amendments (available here) to Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, to shorten the securities settlement cycle for most transactions to T+1 (from T+2), and for firm commitment offerings priced after 4:30 p.m. to T+2 (from T+4).  The SEC has also amended Rule 15c6-1(b) to exempt security-based swaps from the Rule 15c6-1 settlement deadlines (contracts involving the purchase or sale of unlisted/unquoted limited partnership interests will continue to be exempt from these settlement deadlines as well).  

In order to facilitate the shortened settlement cycle, the SEC has adopted additional new rules that will require brokers and dealers to enter into agreements, or to establish, maintain and enforce policies and procedures, providing for the completion of allocations, confirmations, affirmations or any combination thereof, on a same day basis, and for investment advisers to make and keep records of confirmations received and allocations and affirmations sent.  The SEC has also adopted new rules which will require central matching service providers to adopt policies and procedures to facilitate straight-through processing (and to file annual reports regarding their progress with respect to straight-through processing).  

These amendments and new rules will become effective 60 days after publication in the Federal Register.  The amendments exempting security-based swaps from the Rule 15c6-1 settlement deadlines will become effective then.  Otherwise, compliance will be required as of May 28, 2024.

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