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Shortening the Securities Transaction Settlement Cycle

Final rule adopted by the SEC on 15 February 2023 that shortens the standard settlement cycle for most broker-dealer trades from two business days (T+2) to one (T+1); compliance date 28 May 2024.

1 link, 1 backed by primary records

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Dates
15 Feb 2023
Also known as
T+1 settlement rule, SEC T+1 final rule

The Securities and Exchange Commission adopted the rule on 15 February 2023. Its text names “episodes in 2020 and 2021 of increased market volatility” among the reasons; see GameStop short squeeze.

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followed from

  • GameStop short squeeze According to U.S. Securities and Exchange Commission Primary record 12

    The SEC's final rule says it was informed in part by episodes of volatility in 2020 and 2021. The adopting text does not name GameStop; its economic analysis footnote ties the January 2021 clearing-fund demands on brokers to “meme” stocks, and the October 2021 staff report lists a shorter settlement cycle as one method to reduce clearinghouse risk.

Timeline 1 date
  1. 15 Feb 2023 Shortening the Securities Transaction Settlement Cycle
Proof 2 sources
  1. Shortening the Securities Transaction Settlement Cycle (Final rule, Release Nos. 34-96930, IA-6239), U.S. Securities and Exchange Commission, 15 Feb 2023. Primary record
    Now, in part informed by episodes in 2020 and 2021 of increased market volatility that highlighted potential vulnerabilities in the U.S. securities market, the Commission believes that shortening the settlement cycle from T+2 to T+1 can promote investor protection, reduce risk
  2. Staff Report on Equity and Options Market Structure Conditions in Early 2021, U.S. Securities and Exchange Commission (staff), 14 Oct 2021. Primary record
    One method to mitigate the systemic risk posed by such entities to the clearinghouse and other participants is to shorten the settlement cycle.
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