Industry meets with SEC on ‘T+2’ plan after pushing for March adoption

20 March 2017 1:26pm

17 February 2017. By Neil Roland. 

Industry groups met with US Securities and Exchange Commission officials last week after urging adoption of a rule by March to shorten the settlement cycle to two business days following a stock or bond trade, documents show.

Industry representatives met Feb. 8 with acting Chairman Michael Piwowar's co-chief of staff and other SEC staff to discuss the agency's pending proposal to compress the three-day cycle, known as 'T+3,' to 'T+2,' according to SEC memos.

The Securities Industry and Financial Markets Association and the Investment Company Institute, whose representatives attended the meeting, have argued that a shorter cycle would reduce market and counterparty risks faced by traders in the settlement period.

"Swift decisive leadership by the SEC to adopt the T+2 proposal, and doing so by March 2017, will guarantee industry participants continue their rigorous efforts to complete the operational and technological changes required to move to a shorter settlement cycle," Sifma told the SEC in December.

Firms have asked the SEC to adopt a rule that would give them enough time to revamp their systems before industry's planned T+2 start on Sept. 5.

This past week, the Depository Trust and Clearing Corp. started industry-wide testing of systems' T+2 readiness.

SEC proposal

The SEC proposed the rule in September with the endorsement of Commissioners Piwowar and Kara Stein, the only two SEC members left after Chairman Mary Jo White's departure last month.

White had said she would try to finalize the rule by the end of last year.

At the September meeting, Piwowar said: "This proposal is 'a no-brainer,' a 'slam-dunk,' a 'cakewalk' — pick your favorite metaphor."

A vote to adopt the rule hasn't yet been scheduled.

The SEC has already approved T+2 proposals from major industry self-regulators, including the New York Stock Exchange, Nasdaq Stock Market, Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board.

Those industry self-policer rules, however, can't go into effect until an SEC rule is finalized.

Fintech Regulation in 2018