The Canadian Capital Markets Association (CCMA) announced the conclusion of the Canadian capital markets’ T+1 initiative, following a multi-year project to reduce the time between when securities are traded and when they settle. This standard timeframe was reduced effective May 27, 2024 from the previous two-day cycle (trade date plus two business days or T+2) to T+1 for most equities, ETFs, debt, and derivatives.
The decision comes in light of ongoing improvements in institutional trade-matching rates and as a result of a comprehensive CCMA T+1 Post Implementation Review and Report.
The report stated that despite the more and greater challenges, quantitative and qualitative evidence show that the T+1 project was completed successfully in Canada in sync with similar changes in US, as well as Mexican, Jamaican, Argentinian and Peruvian capital markets. Canadian system implementations to allow reporting of trades and settlement with a T+1 value date went smoothly over the May 25-26, 2024 weekend, and payment exchange settled on time daily from the first day (May 27th) on.
Bruce Macdonald, chair of the CCMA Board of Directors, said in a statement that the Board wanted to recognize the significant industry involvement during the project and that the Board expects more improvements in coming months as firms further optimize their systems and process automation: “The Board of Directors has agreed that, effective today, active CCMA operations should be discontinued, as was done following the conclusion of other cross-industry projects that the CCMA has managed. The CCMA remains ready to be re-activated the next time there is a project affecting multiple segments of the financial sector that would benefit from the strong central coordination of the CCMA, with participation across the capital markets industry.”
The CCMA also noted in a release that “countries in Europe and elsewhere are investigating a move to T+1, which would be welcomed by North American capital markets participants and is also seen as a minimum requirement before any further reduction in the settlement cycle. Shortening the settlement cycle more would be considerably riskier and more costly to achieve”.