SEC Proposes T+1 Move

May 24, 2002 ( - The Securities and Exchange Commission (SEC) proposes requiring US securities transactions to move to a T+1 settlement environment, and has asked for public comment.

Currently trades must be settled within three days of execution. T+1 means settling trades a day after execution, which proponents argue is necessary to handle growing trade volumes and reduce risk. Others say moving to T+1 does not make sense economically.

A SEC spokesman noted that the main goal of the rule proposal would be to gather comments from all industry segments, especially smaller players in the investment-management space. He added, “a mandated T+1 conversion is likely the only way the industry will get to a straight-through-processing environment.”

The proposal, which, according to the SEC could be out for comment for approximately three months, will likely come out this summer.