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Nasdaq Makes Preparations to Shorten Settlement Cycle for Securities Transactions from T+3 to T+2

In connection with the industry-led initiative to shorten the settlement cycle for transactions in U.S. equities and other securities from trade date plus three business days (T+3) to trade date plus two business days (T+2), the Nasdaq Stock Market LLC (“Nasdaq”) has preliminarily identified certain rules that establish or reference a T+3 settlement cycle, including rules that establish the ex-dividend date for distributions by Nasdaq-listed companies. 

In order to implement a T+2 settlement cycle, Nasdaq would modify Rule 11140(b)(1) to provide that the "ex-dividend date" will generally be the first business day before the record date. The ex-dividend date is the date on which a security is traded without the right to receive a dividend or distribution that has been declared by a listed issuer. 

The following Nasdaq rules would also be impacted by this amendment:

Nasdaq anticipates filing rule amendments to accommodate the new T+2 settlement cycle later in 2016, and fully implementing T+2 settlement in the third quarter of 2017. Interested parties can submit comments prior to September 30, 2016. 

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© 2020 Jones Walker LLPNational Law Review, Volume VI, Number 245
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About this Author

Peter Rivas, Jones Walker Law Firm, Banking and Financial Services Attorney
Partner

Peter Rivas is a partner in the firm's Banking & Financial Services Practice Group. He counsels clients on a wide range of corporate and securities matters, including mergers and acquisitions, public and private securities offerings, SEC reporting obligations, and corporate governance matters. He regularly represents bank holding companies, commercial banks, savings and loan holding companies, and savings banks on regulatory matters. Mr. Rivas also advises financial institutions with respect to various federal and state corporate and compliance matters.  

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