The Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. on Friday proposed reducing the trade settlement cycle to two days from three days for organizations it oversees, aligning their rules with SEC rules that will begin Sept. 5.
The OCC, which oversee banks and savings organizations, and the FDIC, which insures bank deposits, want to move to a T+2 (trade plus two days) cycle from the current T+3, according to a joint notice issued by both agencies. The Securities and Exchange Commission's rules moving to T+2 will affect businesses it oversees, including money managers and exchanges.
The SEC has said it is instituting the change to enhance efficiency and reduce risk, and to align the U.S. with the European Union, which has used a T+2 cycle since 2014.
Guidance was issued by the OCC in June and the FDIC in July that institutions they supervise should comply with the T+2 settlement standard as of the SEC's compliance date, but the agencies' proposed rule change would codify T+2 for those institutions, according to the notice.
The complete notice is on the OCC website. Comments on the proposal will be accepted for 30 days once it is published in the Federal Register, which is expected the week of Sept. 4, before a decision on the proposal is made.
