Posted By: William James, Senior Content Specialist
Updated: August 29, 2017
Beginning September 5, 2017, the SEC will require broker-dealers to shorten the settlement cycle to two business days. Those securities subject to the current T+3 settlement cycle, such as stocks, bonds, municipal securities, ETFs, and exchange-traded limited partnership interests, will move to T+2. The new SEC T+2 requirement does not apply to certain exempted securities, such as U.S. federal government debt and commercial paper.
Acting SEC Chairman Michael Piwowar recently said, “As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people. The SEC remains committed to ensuring that U.S. securities regulation is reflective of modern times, and in shortening the settlement cycle by one day, we aim to increase efficiency and reduce risk for market participants.”
An investor purchasing a security will be expected to make payment no later than two business days following an applicable trade. An investor selling a security on Monday, for example, must deliver the security to the broker-dealer within two business days of the sale to settle on Wednesday.
Kaplan Financial Education expects that with a change this extensive (represented in the Series 4, 6, 7, 9, 10, 24, 26 exams), FINRA may revise their questions sooner than they have done for other rule changes. Therefore, we have updated our materials, giving students who will be testing on or shortly after September 5th, the opportunity to prepare for the anticipated rule change.
The new DOL fiduciary rule is here! Are you prepared to handle the changes to your business model and the way you generate revenue? Learn from think2perform’s Doug Lennick how to create a competitive advantage from the DOL fiduciary rule by moving to a holistic practice with an advice-based fee model in this free download.