SEC Amends Rule 15c6-1 to Reduce Settlement Time

Publish Date


Compliance Alert

  • Compliance
  • SEC

On February 15, 2023, the Securities and Exchange Commission (SEC) adopted an amendment to Rule 15c6-1 under the Securities Exchange Act of 1934 that reduced the time to settle a security purchase or sale from T+2 to T+1. The amendment will have a compliance date of May 28, 2024.

The amendment also included several other provisions:

  • It reduced the settlement time for firm commitment offerings priced after 4:30 p.m. from T+4 to T+2.
  • It added Rule 15c6-2, which requires relevant parties for transactions to enter a written agreement requiring the trade allocation, confirmation, or affirmation to be completed as soon as technologically practical but no later than end of day on the trade date in order to complete settlement on T+1. In these agreements, broker-dealers must include the following:
    • A description of the technology and processes used to complete the allocation, confirmation, or affirmation
    • Target timeframes to complete the process
    • A description of how the trade information is to be communicated and how any discrepancies or adjustments will be addressed
    • A description of how the broker-dealer will address any delays with the other party completing the process
    • A description of how the completion rate of allocations, confirmations, and affirmations no later than the end of trade date will be monitored and documented

In addition, investment advisers will have to maintain records of the allocations, confirmations, and affirmations for securities transactions subject to the Rule 15c6-2 requirements.

The provisions of Rules 15c6-1 and 15c6-2 do not apply to exempted securities, government securities, municipal securities, commercial paper, bankers’ acceptances, or commercial bills. For covered transactions, a settlement longer than T+1 can be made if both parties expressly agree to the extension at the time of the transaction.

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For more information about Rule 15c6-1 amendments, or how ACA can help you comply with the updated requirements, please contact your ACA consultant or contact us here.

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