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Industry Initiative to Shorten the U.S. Securities Settlement Cycle
In February 2014, ICI’s Board of Governors endorsed an industry initiative led by the Depository Trust & Clearing Corporation (DTCC) to shorten U.S. settlement cycles for a range of securities—including equities, municipal and corporate bonds, and unit investment trusts—from trade date plus three days (T+3) to trade date plus two days (T+2).
Overseen by the DTCC-formed Industry Steering Committee (ISC)—cochaired by Marty Burns, ICI’s chief industry operations officer, and Tom Price, managing director for operations, technology and business continuity planning at the Securities Industry and Financial Markets Association (SIFMA)—the initiative will:
- reduce operational and counterparty risks, enhance liquidity, promote better use of capital, and create significant process efficiencies for market participants—all major benefits to investors;
- bring U.S. settlement cycles in line with those across the globe, helping funds better manage liquidity and cash flows—which in turn will reduce and simplify financing needs; and
- further harmonize the settlement time frames between portfolio securities and fund shares, reducing settlement-timing challenges for fund managers.
DTCC has put together a comprehensive website that details the initiative—to find out more, visit www.ust2.com.
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