U.S. SEC T+1 Standard Settlement Cycle

U.S. SEC T+1 Standard Settlement Cycle

On 9 February 2022, SEC proposed to shorten settlement cycle to reduce risks.

  • SEC requests comment on a proposal to reduce risks in clearance and settlement.
  • Would shorten standard settlement cycle for most B/D transactions in securities from two business days after trade date (T+2) to one business day after trade date (T+1).
  • Designed to reduce the credit, market, and liquidity risks in securities transactions.
  • Chair Gensler, commissioners Peirce, Herren Lee, and Crenshaw supported proposal.

Purpose for Proposal

  • Proposal aims to protect investors, reduce risk, and increase operational efficiency.
  • Cited recent episodes of market volatility, COVID-19 pandemic, and meme stocks.
  • In the future, maybe beneficial to further shorten standard settlement cycle further.

Shortened Settlement Cycle Proposal

  • Exchange proposed to amend 17 CFR 240.15c6-1 (SEA Rule 15c6-1), settlement cycle.
  • Shortened the standard settlement cycle for most B/D transactions from T+2 to T+1.
  • Repealed T+4 settlement cycle for firm commitment offerings priced after 4:30 p.m.

B/D and IA Requirements

  • Improved processing of institutional trades by proposing new requirements for B/Ds and registered IAs; new rules intended to improve the rate of same-day affirmations.
  • New 17 CFR 240.15c6-2 would shorten process of confirming and affirming trade data needed to prepare transaction for settlement so it can complete by end of trade date.
  • Prohibit B/Ds from entering into contracts with institutional customers unless contracts require parties complete allocations, confirmations, affirmations by end of trade date.
  • Amended IAA Rule 204-2 (17 CFR 275.204-2), required registered IA contract parties per 15c6-2 to keep records of confirmations received, allocations, affirmations sent.

Comment Request

  • Solicited comments on how best to further advance beyond T+1; any challenges associated with and potential paths to achieving a same-day settlement cycle (T+0).
  • Comment requested on Regulation SHO (17 CFR 242); financial responsibility rules for B/Ds; Requirements in 17 CFR 240.10b-10; obligations related to prospectus delivery.
  • Requested comment on the proposed compliance date for proposal of 31 March 2024.

SIFMA Statement

  • SIFMA issued statement from president and CEO Kenneth Bentsen Jr. on the proposal.
  • Followed SIFMA release of plan to accelerate securities settlements, see #128436.
  • Said acceleration would improve market resiliency, benefit investors, reduce margin.
  • Welcomed proposal supporting this acceleration of settlement cycle, look forward to reviewing and commenting as industry continues work to follow their roadmap to T+1.


  • Commission proposed to require compliance with each rule change by 31 March 2024.
  • Comments on proposal should be received by 30 days after pending publication in the federal register, or by 11 April 2022 (60 days after issuance), whichever is later.