SEC Alert! In filing with Federal Register, SEC is adopting rule amendments to shorten the standard settlement cycle for most broker-dealer transactions from two business days after the trade date (“T+2”) to one business day after the trade date (“T+1”).
Source: https://public-inspection.federalregister.gov/2023-03566.pdf (277 pages to review)
SUPPLEMENTARY INFORMATION:
First, the Commission is amending paragraph (a) of 17 CFR 240.15c6-1 (“Rule 15c6-1”) under the Securities Exchange Act of 1934 (“Exchange Act”) to This document is scheduled to be published in the Federal Register on 03/06/2023 and available online at federalregister.gov/d/2023-03566, and on govinfo.gov shorten the standard settlement cycle for most broker-dealer transactions from T+2 to T+1, as discussed in Part II.C.1.1 The Commission is also amending paragraph (b) of Rule 15c6-1 to exclude security-based swaps from the requirements under paragraph (a) of the rule, and amending paragraph (c) of Rule 15c6-1 to shorten the standard settlement cycle for firm commitment offerings priced after 4:30 p.m. Eastern Time (“ET”) from four business days after the trade date (“T+4”) to T+2, as discussed in Parts II.C.3 and II.C.4 respectively.
Second, to promote the completion of allocations, confirmations, and affirmations by the end of trade date for transactions between broker-dealers and their institutional customers, the Commission is adopting a new rule under the Exchange Act at 17 CFR 240.15c6-2 (“Rule 15c6- 2”). Rule 15c6-2 requires a broker-dealer to either enter into written agreements as specified in the rule or establish, maintain, and enforce written policies and procedures reasonably designed to address certain objectives related to completing allocations, confirmations, and affirmations as soon as technologically practicable and no later than the end of trade date. The specific requirements of the rule are discussed in Part III.C.
Third, the Commission is amending 17 CFR 275.204-2 (“Rule 204-2”) under the Investment Advisers Act of 1940 (“Advisers Act”) to require registered investment advisers to make and keep records of the allocations, confirmations, and affirmations for securities transactions subject to the requirements of Rule 15c6-2(a), as discussed in Part IV.C.
Fourth, the Commission is adopting a new rule under the Exchange Act at 17 CFR 240.17Ad-27 (“Rule 17Ad-27”) to require clearing agencies that provide a central matching service (“CMSPs”) to establish, implement, maintain, and enforce policies and procedures reasonably designed to facilitate straight-through processing (“STP”) and to file an annual report regarding progress with respect to STP. The specific requirements of the rule are discussed in Part V.C.
Fifth, the Commission is amending 17 CFR part 232 (“Regulation S-T”) to require that a CMSP submit the annual report required by Rule 17Ad-27 using the Commission’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) and tag the information in the report using the structured (i.e., machine-readable) Inline eXtensible Business Reporting Language (“XBRL”). The Commission discusses this requirement in Part V.C.4.
Finally, the Commission solicited and received comments regarding the effect of shortening the settlement cycle on other Commission requirements, including 17 CFR 242.200 (“Regulation SHO”), 17 CFR 240.10b-10 (“Rule 10b-10”), the financial responsibility rules applicable to broker-dealers, requirements related to prospectus delivery and “access versus delivery,” and the impact on self-regulatory organization (“SRO”) rules and operations. These comments are discussed in Part VI.
