| WASHINGTON, March 22
WASHINGTON, March 22 U.S. securities regulators
will take steps on Wednesday to modernize antiquated regulations
that require stock and bond trades to settle within three
business days, a step the industry has urged the government to
take for years.
The Securities and Exchange Commission is expected to vote
later Wednesday morning to shorten that settlement cycle
timeframe to two business days from three, a change that aims to
reduce credit and market risk.
Modern technology lets investors make trades in a matter of
milliseconds. But since 1993, the SEC's rules have required
brokers to wait for three business days between the time an
investor's order is executed, to when the cash and ownership of
the security are exchanged.
Wall Street trade groups have strongly backed reforms to
shorten the settlement cycle, saying it will decrease
counterparty risks, bolster financial stability and align with
many other international markets that have already adopted a
two-day securities settlement cycle.
Consumer groups also support the change, though some have
argued the settlement time should be reduced even further to
just one day.
Once adopted, the rule is slated to take effect on Sept. 5.
(Reporting by Sarah N. Lynch; Editing by Nick Zieminski)