Impatient stock traders: rejoice! Effective September 5, 2017, the SEC will shorten the settlement period for purchase or sale of stocks (equities), bonds, and exchange traded funds (ETF’s). Currently, it takes 3 business days for these types of trades to settle. The new rule will shorten this waiting period down to 2 business days.
What this means for you:
• If you are selling stocks/bonds/ETF’s, you will receive your proceeds one day faster.
• If you are buying stocks/bonds/ETF’s, you will be required to pay for your securities one day sooner.
The change does not affect mutual funds, US Treasury bonds or T-bills, which already settle in one day.
“While a shorter settlement time may seem like a simple technical change, it’s actually a massive undertaking that will meaningfully benefit investors,” says Tom Price, managing director at the Securities Industry and Financial Markets Association (SIFMA).
More than $270 billion in equities, on average, are traded in the US stock exchanges every day, an average of over 6.8 billion shares per day, according to SIFMA.
As always, if you have questions about trading, please reach out to our Investment Advisory team.