In an acknowledgment of technological improvements, the Securities and Exchange Commission (SEC) yesterday adopted an amendment to Rule 15c6-1(a), shortening the standard settlement cycle for most securities transactions effected through a broker-dealer from three business days (T+3) to two business days (T+2). The amendment does not affect any other portions of the rule, including the existing exemptions for government securities, municipal securities and certain other securities and provisions allowing issuers and their underwriters to agree on a different settlement cycle for securities being sold for cash in firm commitment underwritten public offerings.
The amendment reflects the SEC’s continuing focus on reducing credit, market and liquidity risks resulting from failed trades by shortening the settlement cycle, which was previously reduced from T+5 to T+3 in 1993. The SEC indicated that its staff will undertake to provide a report within three years of the effective date of the amended rule on reducing the settlement cycle beyond T+2.
Broker-dealers will be required to comply with the amended rule beginning on September 5, 2017.
The press release announcing the amendment and the release adopting the rule change are available at https://www.sec.gov/news/press-release/2017-68-0 and https://www.sec.gov/rules/final/2017/34-80295.pdf.
If you have any questions regarding this Sidley Update, please contact the Sidley lawyer with whom you usually work, or
|
Eric S. Haueter |
Michael Hyatte |
Edward D. Ricchiuto |
Sidley Capital Markets Practice
Our Capital Markets practice includes lawyers practicing in our offices in the United States, Europe, Asia and Australia. We represent issuers, underwriters and other financial intermediaries in structuring and executing securities transactions and disclosure matters in all of the world’s major financial markets. Our lawyers are qualified to practice law in the United States, England and Wales, Germany, Hong Kong and Japan, and regularly work on matters involving the securities regulators and the securities exchanges in those markets.
To receive Sidley Updates, please subscribe at www.sidley.com/subscribe.
Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.
Attorney Advertising - For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000.