Wall Street’s top regulator was poised Wednesday to adopt rules tightening the time-frame for stock trades in an effort to tamp down the kind of risk seen in 2021’s GameStop (GME.N) fiasco, when retail investors suffered heavy losses.
The U.S. Securities and Exchange Commission (SEC) was also due to vote on whether to propose changing rules protecting client assets held by investment managers.
Officials say shortening the time between when a securities order is placed and when a trade concludes can lessen the kind of “systemic risk” spotlighted in early 2021 when the share price of the consumer electronics retailer GameStop Corp plummeted during a bout of intense market volatility.
Trade groups have broadly welcomed the commission’s proposal to cut the so-called settlement cycle to a single business day from two, six years after an earlier SEC rule shortened the period from three days.
Market participants’ eagerness to move to the shorter settlement cycle “will help expedite the transition and overcome any obstacles,” such as expensive systems updates and industry-wide changes to processes, Cornell University Law Professor Birgitta Siegel said in a comment submitted to the SEC.
This report’s information was first seen on REUTERS; to read more, click this link.
