For over 20 years, the U.S. securities industry has operated under a T+3 settlement cycle. Not since 1995 when the Securities & Exchange Commission (SEC) Rule 15c6-1 changed the cycle from T+5 to T+3, has the industry undergone settlement cycle reform.
Since then, many global markets spanning Asia and Europe have adopted a T+2 settlement cycle, or are on target to migrate in the next few years; in 2014, Europe moved to a T+2 settlement cycle, making T+2 the standard in most global markets. The U.S. and Canada are not far behind with a planned move to T+2 for equities, corporate and municipal bonds, and unit investment trusts (UIT). The initial implementation timeframe is for Q3 2017, with the Depository Trust & Clearing Corporation (DTCC) planning to conduct industry testing in Q1 2017.
Significant effort and investment will be required from the various member firms to comply with the Q3 2017 implementation deadline.