WASHINGTON (Reuters) - U.S. securities regulators moved on Wednesday to modernize regulations that require stock and bond trades to settle within three business days, a step the industry has urged the government to take for years.

A sign for the Securities and Exchange Commission (SEC) is pictured in the foyer of the Fort Worth Regional Office in Fort Worth, Texas June 28, 2012. REUTERS/Mike Stone

The Securities and Exchange Commission voted unanimously to shorten that timeframe to two business days, a change that aims to reduce credit and market risk, including the risk of a trading counterparty defaulting.

Modern technology lets investors make trades in a matter of milliseconds. But since 1993, the SEC’s rules have required brokers to wait for three business days between the time an investor’s order is executed, to when the cash and ownership of the security are exchanged.

“It is finally time to say hasta la vista to the antiquated T+3 settlement cycle,” acting SEC Chairman Michael Piwowar said.

The shortened cycle, he added, will reduce “the time horizon for risk exposures” and also “should improve capital efficiency and enhance the resilience of the national clearance and settlement system.”

Wall Street trade groups have said the change would decrease counterparty risks, bolster financial stability and align with many other international markets that have already adopted a two-day securities settlement cycle.

Consumer groups also support the change, although some have said the settlement time should be reduced even further, to just one day.

Democratic SEC Commissioner Kara Stein expressed some support on Wednesday for shortening the cycle to one day, saying she believes technology exists to accomplish such a goal.

“I have asked the staff to study not only the changes resulting from a movement to a T+2 settlement cycle, but also to consider further improvements,” she said.

The new two-day settlement time is slated to take effect on Sept. 5.

Besides applying to stocks and bonds, the change will also apply to exchange-traded funds, certain mutual funds, municipal securities and limited partnerships that trade on exchanges.