The U.S. Securities and Exchange Commission (SEC) on Wednesday adopted an amendment to shorten the settlement cycle for most broker-dealer transactions from three business days after the trade date (T+3) to two business days after the trade date (T+2).

The new timeframe, which is expected to take effect Sept. 5, seeks to reduce credit, market and liquidity risks associated with unsettled trade for market participants. It will continue to apply to transactions involving bonds, stocks, municipal securities, exchange-traded funds, certain mutual funds and limited partnerships traded on an exchange.

“As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people,” says Michael Piwowar, acting chairman at the SEC, in a statement.

Several members of the T+2 Industry Steering Committee — namely, the Depository Trust & Clearing Corp., Investment Company Institute and Securities Industry and Financial Markets Association — lauded the move, saying that it brings the cycle in line with other global markets.

Read: SEC proposes shorter settlement cycle to reduce risk

“The SEC’s final rule represents a win for investors and our financial markets,” says Paul Schott Stevens, president and CEO of ICI, in a separate statement. “A shorter settlement cycle will directly and tangibly reduce risks within U.S. capital markets, whole better aligning our markets with those in other jurisdictions.”