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MFDF - Mutual Fund Directors Forum - Industry Transitions to T+2 Settlement Cycle

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Industry Transitions to T+2 Settlement Cycle

The SEC’s rule amendment to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions recently became effective.  The new settlement cycle affects stocks, ETFs, corporate and municipal bonds and other financial instruments. Most European Union member states harmonized their settlement cycles to T+2 in 2014 and Canada is currently transitioning to the T+2 settlement cycle. The benefits of the shorter settlement period include: reduced market and counterparty risk, increased financial stability and improved safety and efficiency for investors and market participants, according to a joint statement by SIFMA, the Depository Trust & Clearing Corp. and Investment Company Institute.