NYSE Proposes New Rules to Conform with SEC's T+2 Proposal | Practical Law

NYSE Proposes New Rules to Conform with SEC's T+2 Proposal | Practical Law

The NYSE proposed to adopt new rules to conform with proposed SEC amendments to Rule 15c6-1(a) of the Exchange Act, which would shorten the settlement cycle for most broker-dealer securities transactions to two business days, or T+2.

NYSE Proposes New Rules to Conform with SEC's T+2 Proposal

Practical Law Legal Update w-004-4959 (Approx. 3 pages)

NYSE Proposes New Rules to Conform with SEC's T+2 Proposal

by Practical Law Corporate & Securities
Published on 10 Nov 2016 • USA (National/Federal)
The NYSE proposed to adopt new rules to conform with proposed SEC amendments to Rule 15c6-1(a) of the Exchange Act, which would shorten the settlement cycle for most broker-dealer securities transactions to two business days, or T+2.
On November 4, 2016, the NYSE proposed to adopt new rules to conform with proposed amendments to Rule 15c6-1(a) of the Exchange Act. The SEC proposed amendments to Rule 15c6-1(a) in September 2016 to shorten the settlement cycle for most broker-dealer securities transactions to two business days, or T+2. Currently, the standard settlement cycle for these transactions is three days, known as T+3. The SEC is currently accepting comments on its proposal.
The NYSE's proposal sets out the following rules that would conform to the shortened settlement period proposed by the SEC:
  • Rule 14T (Non-Regular Way Settlement Instructions).
  • Dealings and SettlementsT (Rules 45—299C).
  • Rule 64T (Bonds, Rights and 100-Share-Unit Stocks).
  • Rule 235T (Ex-Dividend, Ex-Rights).
  • Rule 236T (Ex-Warrants).
  • Rule 257T (Deliveries After "Ex" Date).
  • Rule 282.65T (Buyin Procedures).
  • Section 703.02T (part 2) of the Listed Company Manual (Stock Split/Stock Rights/Stock Dividend Listing Process).
The NYSE's proposed new rules would have the same numbering as the current rules, but with the modifier "T" added to the rule number. Except for changes reflecting the shortened settlement period, the proposed rules would be the same as their current counterparts.
Because the NYSE would not implement the proposed rules until after the SEC approves and implements its T+2 proposal, the NYSE would retain the current versions of each rule on its books until after the proposed rules are approved. The NYSE would then file separate proposed rules to:
  • Establish the operative date of its proposed rules.
  • Delete the current version of each rule.
The proposed rule change requires SEC approval.
Update: On February 10, 2017 the SEC approved the proposed rule change. However, the rule change will not take effect until the SEC approves and implements its own T+2 proposal.
To learn more about the SEC's T+2 proposal, see Legal Update, SEC Proposes to Shorten Securities Transaction Settlement Cycle to T+2.