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DALLAS – The American Securities Association (ASA) sent a letter to the Financial Industry Regulatory Authority in support of a recent proposal to shorten the time period for final settlement of syndicate accounts.
“We appreciate FINRA’s ongoing work to review and modernize existing rules to help markets run more efficiently and reduce unnecessary compliance burdens for broker-dealers,” ASA Head of Government Affairs Kelli McMorrow wrote in the letter. “The ASA supports shortening the final settlement cycle period for corporate debt offerings from 90 days to 30 days. The existing 90-day requirement was established 35 years ago, prior to significant technological and logistical improvements that could allow settlement cycles to be significantly shortened.”
“This time period has functioned effectively in the municipal space and it’s reasonable to adopt it for corporate debt as well,” McMorrow wrote.
In the letter, ASA outlined how a shorter settlement cycle could be particularly beneficial for small and mid-size broker-dealers as syndicate receivables cannot be counted towards a firm’s net capital. Prolonging the settlement cycle can limit the ability of smaller brokers participate in new offerings and create a competitive disadvantage that favors large firms.
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