Industry-wide stock settlement cycle change
Learn how the change from 2 days to 1 day benefits your participants.
Effective May 28, 2024, the financial industry, Fidelity included, shortened the settlement cycle from two business days after the trade date (T+2) to one business day (T+1) for several security types. As a plan sponsor, T+1 may or may not have an impact on your plan administration depending on the types of benefits plans you offer. For many participants in an employer-sponsored account, the security subject to the settlement change will be the stock fund that is associated with the company sponsoring the plan, as well as plans that might allow for a self-directed brokerage account as an available option, whereby more individual stocks/securities are available for investment.
This industry-wide change has significant benefits:
- A shorter settlement cycle helps reduce risk for investors and financial markets, including credit risk, market risk, liquidity risk, and systemic risk
- After the sale of a security or a payment of dividend or interest from a security, the proceeds from the sale are available sooner by one day for additional participant direction (i.e., exchange, withdrawal, or reinvestment back to the stock)
For instance, in the case of a purchase of a stock/security whereby no exchange of assets is involved with the purchase, instead of two business days to provide the cash for the purchase, the request now provides those funds promptly to the participant in one business day.
Implementation of the reduction of stock settlement days occurred on May 28, 2024, and all participants converted to the shorter time cycle. There is no action required from participants.
If you have any other benefit plans that your organization offers beyond retirement, you plan administration might have been impacted by these changes. Consult your Fidelity representative for more details.
Learn more
Read the Securities and Exchange Commission (SEC) press release for more information.