Effective September 5, 2017, for most securities, the SEC will shorten the regular-way settlement period from three to two business days. This means:
- Securities must be paid for and delivered by two business days from the trade date
- An investor doesn’t become the owner of record of a security until two business days after purchase
The regular-way settlement cycle is often referred to as T+2, which refers to trade date plus two business days.
This shorter settlement period for the trading of secondary market securities has been discussed by the SEC for years. The change is expected to lower margin requirements for clearing agency members, reduce liquidity stress when markets are volatile, and harmonize settlement with European markets, which moved to T+2 in 2014.
This settlement period will not apply to every securities transaction. T+2, like T+3 before it, will apply to:
- Stocks
- Bonds
- Municipal securities
- Exchange-traded funds
- Mutual funds traded through a brokerage firm
- Unit investment trusts
- Limited partnerships that trade on an exchange
This change affects the Series 6, Series 7, Series 24, Series 26, Series 27, Series 28, Series 52, Series 53, Series 62, Series 65, Series 66, and Series 82.
But never fear—Solomon has already updated all study materials to reflect this change.
The securities industry moves fast. Don’t get left behind!
Visit www.solomonexamprep.com or call us at 503-601-0212 for more information about the latest securities exam preparation and education.