Commencing September 5, 2017, the settlement period for most security transactions will be shorten to two days, from three days. The two-day settlement date applies to most security transactions, including stocks, bonds, municipal securities, mutual funds traded through a brokerage firm, and limited partnerships that trade on an exchange. Government securities and stock options will continue to settle on the next business day following the trade date.
The effort to shorten the settlement period has taken three years and involved some 600 people from 10 regulatory agencies. The change is the first since 1995, when the settlement period was shorten from five days to three.
Improvements in technology and the speed of communication has allowed security transactions to be transmitted more quickly and accurately over the past few decades. Industry jargon for settlement periods are known as “T+2” and “T+3” meaning transaction date plus 2 and 3 days to settle.
Source: SEC
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