In an acknowledgment of technological improvements, the Securities and Exchange Commission (SEC) yesterday adopted an amendment to Rule 15c6-1(a), shortening the standard settlement cycle for most securities transactions effected through a broker-dealer from three business days (T+3) to two business days (T+2). The amendment does not affect any other portions of the rule, including the existing exemptions for government securities, municipal securities and certain other securities and provisions allowing issuers and their underwriters to agree on a different settlement cycle for securities being sold for cash in firm commitment underwritten public offerings.

The amendment reflects the SEC’s continuing focus on reducing credit, market and liquidity risks resulting from failed trades by shortening the settlement cycle, which was previously reduced from T+5 to T+3 in 1993. The SEC indicated that its staff will undertake to provide a report within three years of the effective date of the amended rule on reducing the settlement cycle beyond T+2.

Broker-dealers will be required to comply with the amended rule beginning on September 5, 2017.

The press release announcing the amendment and the release adopting the rule change are available at and