U.S. to Migrate to T+2 by Mid-2017

The U.S. finance industry is planning to migrate to a T+2 settlement cycle by the end of Q3 2017, according to a white paper released by the T+2 Steering Committee (T+2 ISC).

The committee, made up of banks, investment managers and market infrastructures, is aiming to move the U.S. settlement cycle for equities, corporate and municipal bonds, and unit invest trust trades from T+3 to T+2. The committee is organised by the Depository Trust & Clearing Corporation (DTCC).

“The announcement of this proposed timeline by the T+2 ISC is a critical step forward in shortening the settlement cycle and harmonising the U.S. with other major markets globally. The move to a two-day settlement cycle will strengthen the financial system by reducing risk and creating greater operational efficiencies,” says Michael Bodson, president and CEO, DTCC.

The proposed implementation timeline was recommended by the T+2 ISC after thorough input from more than 600 industry participants across 12 market segments.

The move to T+2 in the U.S. is contingent upon obtaining regulators’ support to amend applicable rules in a timely manner, and upon successfully completing industry-wide testing during Q2 and Q3 2017.

“Reducing the settlement cycle will give investors a greater sense of confidence in the U.S. markets and enable quicker access to funds following trade execution. ,” adds Kathleen Joaquin, co-chair of the ISC and chief industry operations officer, Investment Company Institute (ICI).