CCMA seeks regulatory certainty for T+1

With less than a year to go until the securities settlement cycle is chopped to T+1, the Canadian Capital Markets Association (CCMA) is calling on regulators to provide the industry with greater planning certainty.

The deadline for moving from the current T+2 settlement cycle to T+1 for the Canadian market is May 27, 2024.

“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,” said Keith Evans, executive director of the CCMA, in a release.

The CCMA said is calling on regulators to confirm the industry’s current planning target of matching 90% of trades by 3:59 a.m. Eastern time on T+1. (Canadian regulators have proposed amendments to the national instrument that would require 90% of institutional trades to be matched by 9:00 p.m. on trade date.)

“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,” the CCMA said, adding that any delay in confirming that deadline for trade matching will increase implementation risk and systemic risk, which could harm 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,” the association added.

Earlier this year, both the Canadian Securities Administrators and the Canadian Investment Regulatory Organization proposed rule amendments that aim to support the planned move to T+1.

While those proposed changes have yet to be finalized, the CCMA is seeking confirmation of the trade matching deadline by “early summer.”

The association has also launched a web portal and checklist to help firms with their own preparations for the transition to T+1.

“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 U.S. counterparts in May of next year,” Evans said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.