U.S. regulators and self-regulatory organizations have been moving towards a T+2 settlement cycle for secondary market transactions. In November 2016, the NYSE took its own expected steps in this direction, with a series of proposed rule changes. The NYSE’s rule filing may be found at the following link: https://www.nyse.com/publicdocs/nyse/markets/nyse/rule-filings/filings/2016/NYSE-2016-76.pdf.

To effect the T+2 settlement cycle, the NYSE would adopt a series of related rules:

  • Rule 14T (Non-Regular Way Settlement Instructions);
  • Dealings and SettlementsT (Rules 45–299C);
  • Rule 64T (Bonds, Rights and 100-Share-Unit Stocks);
  • Rule 235T (Ex-Dividend, Ex-Rights);
  • Rule 236T (Ex-Warrants);
  • Rule 257T (Deliveries After “Ex” Date);
  • Rule 282.65T (Buy-in Procedures); and
  • Section 703.02T (Part 2) of the Listed Company Manual (Stock Split/Stock Rights/Stock Dividend Listing Process).

Market participants may comment on the rule changes, in particular, as to whether any additional changes may be needed or desirable to affect the move to a shorter settlement cycle.

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For a discussion of the SEC’s proposed rule changes to facilitate T+2 settlements, please see: http://www.bdiaregulator.com/2016/09/twenty-three-years-later-one-day-shorter-sec-proposes-t2-rule-amendment/.

For a discussion of FINRA’s related proposed rule changes, see: http://www.bdiaregulator.com/2016/03/finra-and-t2-the-rule-roll-out-begins/.

For a discussion of the potential impact of T+2 settlements on the structured products industry, please see our January 2016 issue of Structured Thoughts, which can be found at: https://media2.mofo.com/documents/160115structuredthoughts.pdf.