On February 15, 2023, the Securities and Exchange Commission (SEC) adopted a set of rule amendments and new rules to facilitate the shortening of the standard settlement cycle for most broker-dealer transactions from two business days after the trade date (or T+2) to one business day after the trade date (or T+1). 

The compliance date for the T+1 timeline is next Tuesday, May 28, 2024 – immediately after Memorial Day.  Yesterday, SEC Chair Gensler issued a statement on the upcoming implementation date.

The SEC originally established a standard settlement cycle of three business days (or T+3) for most securities transactions in 1993. In 2017, the SEC shortened the standard settlement cycle from T+3 to T+2. 

For issuers and offerings, involved parties can still agree to a longer settlement cycle for firm commitment underwritten offerings. Also, the default timeline for offerings that price after 4:30 p.m. Eastern  will be T+2, though it is expected the majority of equity transactions will close one day after trading begins.

If you have any questions, please email the author directly or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.