The US T+2 Industry Steering Committee (ISC) has announced 5 September 2017 as the target date for the market to move from a T+3 to a T+2 settlement cycle.
The ISC, organised by the Depository Trust and Clearing Corporation and co-chaired by the Securities Industry and Financial Markets Association and the Investment Company Institute, made the recommendation following its Industry Playbook, published in December 2015.
In the playbook, the ISC detailed a timeline for implementation, including milestones and dependencies that participants should consider in order to successfully migrate to a shorter settlement cycle.
The suggested implementation date was chosen after consultation with industry participants and other global markets, taking in to account high-volume transaction days, large corporate action days and public holidays.
Shortening the settlement cycle for equities, corporate and municipal bonds, and unit investment trusts in the US is intended to reduce operational, systemic and counterparty risk, while also reducing liquidity needs. This should lead to improved market structure, and a safer and more efficient system for investors.
The target implementation date of 5 September is subject to support from regulators and also relies on the successful completion of industry-wide testing in Q2 and Q3 2017.
