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Securities Operations: Shortening the Settlement Cycle

June 09, 2017 / Source: OCC

OCC BULLETIN 2017-22
Subject: Securities Operations
Date: June 9, 2017
To: Chief Executive Officers of All National Banks and Federal Savings Associations, Federal Branches and Agencies of Foreign Banks, Department and Division Heads, All Examining Personnel, and Other Interested Parties

Description: Shortening the Settlement Cycle

Summary

The Office of the Comptroller of the Currency (OCC) is issuing this bulletin to highlight actions that national banks and federal savings associations (collectively, banks) should take to prepare for the change in the regular securities settlement cycle for most U.S. securities transactions. The change becomes effective on September 5, 2017.

Note for Community Banks

This guidance applies to all OCC-supervised banks.

Highlights

  • Effective September 5, 2017, the regular industry settlement cycle for many U.S. securities including equities, corporate and municipal bonds, and unit investment trusts—and financial instruments composed of these products—will be shortened from the third business day after the trade date (T+3) to the second business day after the trade date (T+2).
  • Amendments to U.S. Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB) rules reflect this change.
  • Banks should prepare to meet the applicable time frames for the T+2 settlement cycle for trades related to banks’ securities activities. These activities include banks’ investment and trading portfolios and securities settlement and servicing provided to banks’ custody and fiduciary accounts.
  • Banks that offer retail nondeposit investment products through a broker-dealer should assess the broker-dealer’s preparedness for the new settlement time frames.

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