A two-day settlement cycle will yield numerous
benefits for investors, regulators and market participants
New
York/London/Hong Kong/Singapore, 22 March, 2017 – The Depository
Trust & Clearing Corporation (DTCC), ICI and SIFMA, on behalf of the T+2
Industry Steering Committee (T+2 ISC), commend
the U.S. Securities and Exchange Commission (SEC) for finalizing rule changes that
facilitate the industry’s transformational effort to achieve a two-day
settlement cycle (T+2). The revised SEC rule establishes a standard settlement
timeframe of two days for U.S. equity, corporate and municipal bond, and unit
investment trust (UIT) trades, providing regulatory certainty to promote a
coordinated and effective industry transition to T+2 on September 5, 2017.
Shortening the time it takes to
settle trades from the current three-day cycle, known as T+3, to T+2 will
provide significant benefits to
investors and market participants. A shorter settlement timeframe will reduce
credit, market and liquidity risks, promote financial stability, and align the
U.S. with other T+2 settlement markets across the globe.
Shortening the settlement cycle
is also consistent with the SEC’s focus on enhancing the resilience and efficiency
of the national clearance and settlement system. Given the lower levels of risk
associated with a shorter settlement cycle, DTCC estimates the move will reduce
the average daily capital requirements for clearing trades through DTCC's National Securities
Clearing Corporation (NSCC) by 25 percent, or $1.36 billion. A shorter
settlement cycle will further enhance U.S. market structure, improving safety
and efficiency for investors.
Murray Pozmanter, Head of
Clearing Agency Services and Global Operations and Client Services at DTCC,
stated, “We are pleased to see the SEC take important action to align the U.S.
settlement cycle with other key markets around the
globe. We commend Acting Chairman Piwowar and Commissioner Stein for their
dedication and leadership on this issue. This critical step will ensure that
market participants are working towards a common goal, which will ultimately
reduce risks and costs for the benefit of the industry.”
“The
SEC’s final rule represents a win for investors and our financial markets,”
said Paul Schott Stevens, president and CEO of ICI. “A shorter settlement cycle
will directly and tangibly reduce risks within U.S. capital markets, while
better aligning our markets with those of other jurisdictions.”
“Shortening
the time to trade settlement may sound simple, but in fact is a
transformational effort to enhance the investor experience, reduce risk, and
keep the U.S. competitive with global markets,” said Kenneth E. Bentsen, Jr.,
SIFMA president and CEO. “The SEC’s action marks a critical milestone and the
last major hurdle in the T+2 effort. Moving forward, robust planning and
coordination among the industry and regulators will be essential to meet the
T+2 target date of September 5, 2017.”
Notes to
Editors
For additional information and
updates on the T+2 migration, visit http://www.ust2.com/
About DTCC
With over 40 years of experience, DTCC is the premier post-trade
market infrastructure for the global financial services industry. From
operating facilities, data centers and offices in 16 countries, DTCC, through
its subsidiaries, automates, centralizes and standardizes the post-trade
processing of financial transactions, mitigating risk, increasing transparency
and driving efficiency for thousands of broker/dealers, custodian banks and
asset managers worldwide. Industry owned and governed, the firm simplifies the
complexities of clearing, settlement, asset servicing, data management and
information services across asset classes, bringing increased security and
soundness to the financial markets. In 2015, DTCC’s subsidiaries processed
securities transactions valued at more than US$1.5 quadrillion. Its depository
provides custody and asset servicing for securities issues from over 130
countries and territories valued at US$45.4 trillion. DTCC’s global trade
repository maintains approximately 40 million open OTC positions and processes
roughly 280 million messages a week. To learn more, visit us at www.dtcc.com or connect with us on LinkedIn, Twitter, YouTube and Facebook.
Contact: Kristi Morrow, DTCC +1 617 880 6770 [email protected]
About ICI
The Investment Company Institute (ICI)
is a leading global association of regulated funds, including mutual funds,
exchange-traded funds (ETFs), closed end funds, and unit investment trusts
(UITs) in the United States, and similar funds offered to investors in
jurisdictions worldwide. ICI seeks to encourage adherence to high ethical
standards, promote public understanding, and otherwise advance the interests of
funds, their shareholders, directors, and advisers. ICI’s US fund members
manage total assets of US$18.4 trillion and serve more than 90 million US
shareholders. To learn more, please visit http://www.ici.org.
Contact: Matthew Beck, ICI +1 202 326 5891 [email protected]
About SIFMA
SIFMA is the voice of the U.S. securities industry. We represent the
broker-dealers, banks and asset managers whose nearly 1 million employees
provide access to the capital markets, raising over $2.5 trillion for
businesses and municipalities in the U.S., serving clients with over $18.5
trillion in assets and managing more than $67 trillion in assets for individual
and institutional clients including mutual funds and retirement plans. SIFMA,
with offices in New York and Washington, D.C., is the U.S. regional member of
the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
Contact: Liz Pierce, SIFMA +1 212 313 1173 [email protected]
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