Wall Street watchdog set to adopt rules aimed at GameStop-type risk

SEC is set to vote on whether to propose changing rules protecting client assets held by investment managers

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 fiasco, when retail investors suffered heavy losses.

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. In a report on the events surrounding the GameStop trades of early 2021, SEC staff noted that the longer a trade remained unsettled, the greater the likelihood that a buyer or seller would default — by refusing to pay or to hand over shares sold.

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