SEC Releases Risk Alert on Shortened Settlement Cycle

In a recent risk alert released by the Securities and Exchange Commission’s Division of Examinations, the Division highlights the impact the shortened settlement cycle will have on market participants like broker-dealers, clearing agencies, and registered investment advisers. Changes include analyzing current business practices to ensure they conform to new requirements, updating computer systems, and adjusting certain technology features. The Exams staff notes it, “intends to continue engaging with Registrants through examinations and outreach, as applicable to each Registrant type.” Specifically, the adopted amendments to the Advisers Act require all registered investment advisers to make and keep certain records for any transaction, including “each confirmation received, and any allocation and each affirmation sent or received, with a date and time stamp for each allocation and affirmation that indicates when the allocation and affirmation was sent or received.” The Risk Alert notes the issues identified are “intended to aid Registrants to identify and assess necessary changes and critical dependencies to successfully manage this transition to T+1.”

Click here to read the SEC Risk Alert on Shortening the Securities Transaction Settlement Cycle.