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:
Rule 2830 (Investment Company Securities, incorporated by reference from NASD Rule 2830)
Rule 11150(a) (Transactions "ex-interest" in bonds which are dealt in "flat")
Rules 11210(c) and (d) (Confirmations)
Rule 11320(b) and 11320(c) (Dates of delivery)
Rule 11620 (Computation of interest)
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.