On March 22, 2017, the SEC adopted an amendment to the settlement cycle rule under the Securities Exchange Act to shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date (i.e., T+3) to two business days after the trade date (i.e., T+2). The SEC's adopting release for the rule amendment cites comments on the T+2 proposing release (published on September 28, 2016), including from the Investment Company Institute (ICI), that noted, in the context of mutual funds, a shortened settlement cycle would reduce the timing mismatch and funding gap between settlement of a mutual fund's portfolio securities (which settle on T+3) and the settlement of shares issued to investors through the mutual fund itself (which generally settle on T+1), improving cash management for funds to meet redemptions. The adopting release notes that such comments support the SEC's belief that "by better aligning the settlement cycle between the underlying portfolio securities and the securities issued to investors through the mutual fund, the risk to the fund, and ultimately investors is reduced." The amendment to the settlement cycle rule will go into effect on September 5, 2017.

The adopting release directs the SEC staff to submit a report to the SEC no later than September 5, 2020, examining the impact of the establishment of the T+2 standard settlement cycle on market participants and the potential impacts associated with moving to an even shorter settlement cycle.

The SEC's adopting release is available at: https://www.sec.gov/rules/final/2017/34-80295.pdf.