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June 01, 2018

US Agencies (FDIC and OCC) issued a final rule to shorten the standard settlement cycle for securities purchased or sold by the institutions they supervise. The final rule is consistent with an industry-wide transition to a two business-day settlement cycle, which is designed to reduce settlement exposure and align settlement practices across all market participants. The final rule will be effective from the first calendar quarter date following 30 days from date of its publication in the Federal Register.

The rule requires banks to settle most securities transactions within the number of business days in the standard settlement cycle followed by registered broker dealers in the U.S., unless otherwise agreed to by the parties at the time of the transaction. Banks will be able to determine the number of business days in the standard settlement cycle followed by registered broker dealers by referencing SEC Rule 15c6-1, 17 CFR 240.15c6-1(a).

On September 05, 2017, the securities industry in the U.S. transitioned from a standard securities settlement cycle of three business days after the date of the contract, commonly known as T+3, to a two-business-day standard, or T+2. On September 11, 2017, the agencies proposed amending regulations applicable to OCC-supervised institutions and FDIC-supervised institutions by aligning those regulations with a T+2.

 

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Effective Date: First calendar quarter date following 30 days from FR publication

Keywords: Americas, US, Securities, Banking, Settlement Cycle, T+2, US Agencies

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