What You Need to Know
- SEC has begun a sweep of advisors' compliance with T+1.
- SEC staff are requesting that RIAs produce details on procedures related to their trade affirmation process and the associated recordkeeping requirements.
- The scope of the SEC requests goes beyond the requirements for RIAs arising from the T+1 transition, the attorneys say.
The Securities and Exchange Commission has begun a sweep of advisors’ compliance with T+1, the shortening of the securities transaction settlement cycle from two business days after the trade date to one.
“Over the last week, several registered investment advisers have received examination letters” from the SEC’s headquarters in Washington as well as from at least one regional office related to T+1, according to attorneys at K&L Gates.
In a just-released client alert, the attorneys state that SEC staff “are requesting that RIAs produce details on procedures related to their trade affirmation process and the associated recordkeeping requirements.”
The new T+1 rules, which took effect on May 28, prohibited broker-dealers “from engaging in any securities transaction that would not settle before T+1 (subject to certain exceptions) and required broker-dealers to adopt policies and procedures designed to facilitate completion of the allocation, confirmation, and affirmation process (the ACA Process),” trade date, the K&L Gates attorneys state.
The SEC also amended the recordkeeping rules applicable to RIAs to require the retention of certain communications relating to the ACA process.