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B. G., Opalesque Geneva: In response to the meme stock events of 2021, the U.S. Securities and Exchange Commission has decided the settling of securities transactions should take one business day after the trade date instead of two (from T+2 to T+1), and has just approved rule changes that should take effect in May next year.
The adoption of the rule changes to shorten the standard settlement cycle for most broker-dealer transactions in securities would not only benefit investors, they say, it would also reduce credit, market, and liquidity risks encountered in securities transactions. The SEC proposed the rule changes a year ago.
"I support this rulemaking because it will reduce latency, lower risk, and promote efficiency as well as greater liquidity in the markets," said SEC chair Gary Gensler. "Today's adoption addresses one of the four areas the staff recommended the Commission address in response to the meme stock events of 2021. Taken together, these amendments will make our market plumbing more resilient, timely, orderly, and efficient."
The SEC last shortened the standard settlement cycle from T+3 to T+2 in 2017.
A T+1 settlement cycle, the norm in the 1920s, is also used by the U.S. Treasury market and was adop...................... To view our full article Click here
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