SEC to Vote on Clearing Agencies, Settlement Cycle

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Rob Tricchinelli

Sept. 22 — The SEC will meet Sept. 28 to vote on beefing up rules governing clearing agencies, as well as on a proposal to shorten the time frame in which parties must settle trades.

Clearing agencies act as intermediaries between trading parties and settle those trades.

The SEC proposed in March 2014 to bolster risk management and disclosure procedures for some of the largest clearing agencies, including the Depository Trust & Clearing Corp. .

The clearing agencies would face stricter liquidity and governance requirements under the proposal as well.

Shorter Cycle

The agency is likely to propose a shorter trade settlement cycle, which is period of time in which parties must complete their obligations under a trade by sending money and securities.

The current window is “T+3”—three days from the transaction date—but SEC Chairman Mary Jo White and other commissioners have supported a rule to make it T+2 (180 SLD, 9/17/15).

The potential proposal enjoys industry support as well (118 SLD, 6/19/15).

In July, Commissioner Michael Piwowar said the agency's delay in acting on the topic “is not only frustrating to me personally, but is detrimental to efforts to improve investor protection” (132 SLD, 7/11/16).

To contact the reporter on this story: Rob Tricchinelli in Washington at

To contact the editor responsible for this story: Seth Stern at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Securities & Capital Markets on Bloomberg Law