ICI Endorses Move to Shorten Settlement Cycles Initiative to Reduce Systemic, Operational Risks Could Benefit Investors
Washington, DC, February 18, 2014 - The Board of Governors of the Investment Company Institute has endorsed unanimously an industry initiative led by The Depository Trust & Clearing Corporation (DTCC) to shorten settlement cycles for a range of securities to trade date plus two days (T+2), ICI President and CEO Paul Schott Stevens announced today.
Under current market arrangements, settlement of securities globally occurs anywhere from one to five days after trade execution. In the United States, equity trades clearing through DTCC generally settle three days after the trade (T+3), while most mutual fund trades settle one day after the trade (T+1). The voluntary move to a T+2 settlement cycle for securities currently settling at T+3 or longer would result in a meaningful reduction in systemic, liquidity, and operational risks; would promote better use of capital; and would create significant process efficiencies for market participants—all changes that would benefit investors.
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