The Canadian Capital Markets Association (CCMA) marked the start of the one-year countdown until launching a standard T+1 (day-after-trade) securities settlement cycle for debt, equities, exchange-traded funds (ETFs), derivatives, and certain other investment assets.
The last day for trades executed to settle on our current two-day settlement cycle in Canada and the US is the fourth Friday in May next year, with one-day settlement starting on the following business day – May 27, 2024 in Canada. The CCMA – the official source for T+1 information – is coordinating Canada’s implementation of T+1. As the umbrella group for major systems and initiatives spanning multiple parts of Canada’s capital markets, the CCMA is working closely with all major investment industry associations as well as American counterparts.
Keith Evans, executive director of the CCMA, said in a statement: “We’re at the roll-up-your-sleeves, all-hands-on-deck stage, so that we will reach a safe T+1 landing with our US counterparts in May of next year. Let’s go!”
With the US Securities and Exchange Commission (SEC) setting the US transition date in February, Canadian and US capital markets were left with 15 months to implement material changes to the securities trade-execution-to-settlement cycle.
Evans said in a statement: “This change is the most complicated in cross-capital-markets history to date. It’s not just about pushing a button: every part of the interconnected securities processing chain must be tested and ready across multiple participants that both compete with each other, but must also work together. Regulators, the CCMA, and industry participants all have key roles to play.”
- Role of regulatory authorities: To provide immediate regulatory certainty for industry work efforts to proceed
- The CCMA is requesting that the securities and systemic regulatory authorities provide regulatory certainty on a critical technical issue by early summer. A year ago, the CCMA and members recommended, and have since based all planning and development on, matching details of 90% of trades by 3:59 a.m. on T+1 to direct work effort across the industry.
- With less than a year to go, the interconnected participants in the Canadian capital markets cannot afford to restart planning to meet an earlier trade matching threshold. Further delays in confirming the trade-matching deadline will increase T+1 implementation and systemic risk, potentially impacting financial system stability.
- Eliminating doubt now will best enable the industry to successfully meet the May 27, 2024 transition date; reducing risk is in the best interests of investors and of Canada and the Canadian economy.
- Role of the CCMA: To make accurate, clear Canadian T+1 information and tools more easily available. Given the short time until Canada’s May 27, 2024 T+1 transition date, and as Canadian participants are finalizing their T+1 road maps and have started making systems/process changes, any confusion can be costly, so the CCMA has launched:
- A new T+1 web portal, with a countdown clock, to make new material easier to access.
- A T+1 self-assessment checklist, so firms can benchmark their progress and make plans.
- A new project-oriented bulletin, to be issued every other month on the status of industry preparations, complementing the CCMA’s longstanding bi-monthly T+1 newsletters.
- Role of industry participants: To examine and automate upstream and downstream systems and processes
- Do not expect, but rather check, whether each other party in the end-to-end trade process chain will solve the problems causing delays