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Securities Operations: Shortening the Standard Settlement Cycle

January 17, 2024 / Source: OCC


The Office of the Comptroller of the Currency (OCC) is issuing this bulletin to highlight actions that banks1 should take to prepare for a change in the standard securities settlement cycle for most U.S. securities transactions. The compliance date for this change is May 28, 2024.


This bulletin replaces and rescinds OCC Bulletin 2017-22, “Securities Operations: Shortening the Settlement Cycle.” This bulletin also replaces and rescinds OCC Bulletin 2018-15, “T+2 Securities Transaction Settlement Cycle: Final Rule.”2

Note for Community Banks

This bulletin applies to community banks.


  • The Securities and Exchange Commission (SEC) has adopted final rules that shorten the standard settlement cycle for most broker-dealer transactions from the second business day after the trade date (T+2) to the first business day after the trade date (T+1). The compliance date for this change is May 28, 2024.
  • Banks should prepare to meet the applicable time frames for the T+1 settlement cycle for trades related to banks’ securities activities. These include activities related to banks’ investment and trading portfolios and securities settlement and servicing provided to banks’ custody and fiduciary accounts.
  • Banks that offer retail nondeposit investment products through a broker-dealer should assess the broker-dealer’s preparedness for the new settlement time frames.


On February 15, 2023, the SEC adopted amendments to Rule 15c6-1 that shorten the standard settlement cycle for most broker-dealer transactions from T+2 to T+1.3 This is the SEC’s latest move to shorten the U.S. settlement cycle after a move in 2017 from three business days after the trade (T+3) to T+2. In addition, on May 25, 2023, the SEC approved a similar rule change by the Municipal Securities Rulemaking Board (MSRB) to the settlement cycle for municipal securities.4 These rule changes are designed to reduce the credit, market, and liquidity risks in securities transactions.

With certain exceptions, OCC regulations require that all contracts effected or entered into by banks for the purchase or sale of a security shall provide for completion of the transaction within the number of business days in the standard settlement cycle followed by registered broker-dealers in the United States, unless otherwise agreed to by the parties at the time of the transaction.5 The OCC expects banks to be prepared to meet T+1 standards as of the compliance date of May 28, 2024.

Banks should evaluate their preparedness for the accelerated settlement cycle and employ effective change management processes for timely implementation of this industry-wide change. Preparation includes identifying all lines of business, products, and activities that involve securities settlement and servicing. Bank management should monitor the progress of industry participants as preparation and testing are coordinated and completed. This monitoring includes regulatory changes that affect securities settlement and servicing, system and process changes at financial market utilities, custodians’ system and process changes, and third-party system or service provider changes.

Based on the nature and scope of banks’ securities processing activities, bank management should identify system, process, and technological changes and enhancements needed to facilitate a smooth transition to T+1. Bank management should establish and follow an appropriate project plan to address these changes and enhancements to existing processes and implement an appropriate risk management system for the new and modified activities arising from the new industry standards and regulatory developments.6 Factors management should consider when developing the project plan include

  • changes to investment accounting, trust accounting, or other securities processing systems.
  • changes to operational procedures for securities clearance and settlement, reconciliation, income processing, corporate action processing, fund accounting, fund services, and securities lending.
  • changes to credit and counterparty credit risk management.
  • changes to funding and liquidity activities, such as foreign exchange (FX) transactions, collateral management, and funding options.
  • changes to client agreements and disclosures that reflect settlement time frames.
  • changes to client communication, trade confirmations, and account statements.
  • updates to third-party oversight to assess third parties’ T+1 implementation processes, including with respect to retail nondeposit investment products offered through a broker-dealer.
  • changes to service-level agreements with third parties providing trade clearance and settlement, income processing, corporate action processing, or other services affected by T+1 implementation.
  • training for front-, middle-, and back-office employees.
  • enhanced focus on risk management practices, risk metrics, and surveillance systems to effectively identify and address potential increases in failed trades or processing exceptions.
  • updates to staffing, including after-hours staff, and contingency planning for the days leading up to and immediately following implementation.
  • evaluation of current processes and possible adoption of streamlined and automated processes and workflows to improve overall efficiencies.
  • changes to market synchronization, as the U.S. settlement cycle will no longer align with many international markets, and the associated operational impacts (e.g., time zone coordination, servicing funds with U.S. and non-U.S. holdings, etc.).

For broad risk management guidance for implementing product changes, banks should refer to OCC Bulletin 2017-43, “New, Modified, or Expanded Banking Products and Services: Risk Management Principles.”

For many banks, the majority of the changes needed to implement T+1 will be completed by third parties—industry utilities, custodians, systems and service providers, broker-dealers through which banks trade for themselves or on behalf of their fiduciary and custody accounts, and broker-dealers providing retail brokerage services to bank customers. For guidance on assessing and managing risks associated with third-party relationships, banks should refer to OCC Bulletin 2023-17, “Third-Party Relationships: Interagency Guidance on Risk Management.”

The industry has created detailed resources to assist market participants in navigating the change to T+1, including an industry playbook, which may prove useful for banks navigating this change.7 Banks are encouraged to reach out to their supervisory office if they have further questions.

Further Information

Please contact Chizoba Egbuonu, Director, Asset Management Group, Market Risk, at (202) 649-6360.


Grovetta N. Gardineer
Senior Deputy Comptroller for Bank Supervision Policy

1 “Banks” refers collectively to national banks, federal savings associations (FSAs), and federal branches and agencies of foreign banking organizations.

2 The “Securities Transaction Settlement Cycle” final rule published at 83 Fed. Reg. 26347 (June 7, 2018) remains in effect. The final rule generally requires banks to settle securities transactions within the number of business days in the ‘standard settlement cycle followed by registered broker dealers in the United States, unless otherwise agreed to by the parties at the time of the transaction. See 12 CFR 12.9(a) (national banks); 12 CFR 151.130(a)(1) (FSAs).

3 Refer to SEC Rule 15c6-1 under the Securities Exchange Act of 1934. Also refer to 88 Fed Reg. 13872 (March 6, 2023).

4 Refer to MSRB Regulatory Notice 2023-06, “MSRB Adopts Amendments to Rules G-12 and G-15, Shortening Regular-Way Settlement for Municipal Securities Transactions to T+1.”

5 Refer to 12 CFR 12.9(a) (national banks); 12 CFR 151.130(a)(1) (FSAs); 12 CFR 28.13(a)(1) (generally applying the same laws and regulations for national banks to federal branches and agencies).

6 Refer to the “Corporate and Risk Governance” booklet of the Comptroller’s Handbook and to OCC Bulletin 2017-43, “New, Modified, or Expanded Bank Products and Services: Risk Management Principles.”

7 Refer to Depository Trust and Clearing Corporation, “Shortening the Settlement Cycle.”