The SEC has announced that securities transactions in the United States, formerly settled T+3, must in most cases as of September 2017, settle at T+2.
The amended Rule 15c6-1(a) would prohibit a broker-dealer from effecting or entering into a contract for the purchase or sale of a security that provides for payment of funds and delivery of securities later than T+2, unless otherwise expressly agreed to by the parties at the time of the transaction.
The rationale for the change is to reduce risk and increase efficiency. In our experience, many firms are perfectly capable of T+2 or even T+1 settlement, but as there was no incentive or consensus around early settlement, there was little reason to move quickly. A common exception was government securities, which have traditionally settled at T+1 already.
Per the SEC Press Release: “As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people,” said SEC Acting Chairman Michael Piwowar. “The SEC remains committed to ensuring that U.S. securities regulation is reflective of modern times, and in shortening the settlement cycle by one day we aim to increase efficiency and reduce risk for market participants.”
The FIX protocol has many tags and workflows to facilitate settlement, both for sending settlement instructions to depositories and for internal processes around post-trade in general. Our Flyer Trading Network is not just for orders and executions, but also serves as a cost effective post-trade transaction network.
With over 120 clients worldwide, FIX Flyer develops advanced technology for managing complex, multi–asset securities trading using highly scalable software and network technologies. Clients include UBS, TD Ameritrade, Envestnet, GBM, Barclays, Berenberg Bank, Bank of America Merrill Lynch, Goldman Sachs, and JP Morgan as well as major exchanges like ASX and MexDer. FIX Flyer is headquartered in New York City with offices in Boston and Hyderabad, India.