SEC Letter to Investment Advisers on T+3 Settlement Cycle

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.;~,.. SECTON 9- ~ (i5-=~~~~ /..-; .\ ISI ''''l. i,.' '':\ uNITED STATES RULE !i'',~~ ~; SECURITIES AND EXCHANGE COMMISSION -.~ '~, :..g i? ;:-' .7-.l- /;:. .:,~_/:~/ WASHINGTON. D.C. 20549 PimUC .l'-.4l'~~1' AVLULAILITY .1 ö l?-s Lc¡ :l- DIVISION OF

MARKET REGUi-ATION iJIVICN OF
IN MA

. .oct 25, 199:

Dear Investment Adviser:
As you may be aware, the Commission has adopted Rule 15c6-:

under the Securities Exchange Act of 1934 that will require,

effective June 1, 1995, most securities transactions to be

settled within a three business day time frame. This means a

decrease in the settlement cycle of two business days. The

Commission took this step to increase the safety and efficiency of the U. S . capital markets as well as to maintain the primary role of those markets in the global economy. To accommodate this

change, we encourage you to take.. appropriate measures now to prepare for conducting routine operations in a shorter settlement

env ironment..

As an investment manager, you play a critical role in the

settlement process. Timely communication of the allocation of

your trades is essential to broker-dealers' ability to meet their

obligations to issue confirmations, and timely affirmation of

your trades is essential to authorizing brokers and account

custodians to move funds and securities in settlement of trades.

Shortening the settlement cycle will reduce the time available to

communicate allocations, confirmations, and affirmations, to

resolve errors, and to schedule orderly dispositions of funds and securities. Because of the shortened settlement cycle, it will become

even more critical that you complete the allocation/confirmation/

affirmation process as quickly as possible. We urge you to

review your procedures and operations and to begin or to continue

making all modifications necessary for settlement in a T+3

environment. You are encouraged to contact Jonathan Kallman,

Associate Director, Office of Market Supervision, Division of

Market Regulation, at 202/942-0130 with any questions you may

have.
Sincerely, Sine-rely ~ /\
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Brandon Becker Barry ~. /Barbash Director Directbf , Division of Division of Market Regulation Investment Management