Contemplating T+1 for Canada

With the U.S. securities industry starting to talk about shortening settlement cycles once again, the Canadian Capital Markets Association (CCMA) is gearing up to consider the idea as well.

At its latest board meeting, the CCMA formally approved the undertaking of a review of a possible move to cut the settlement cycle from its current T+2 standard to T+1 in the Canadian capital markets.

“Canadian financial services members have been involved in discussions of a reduced settlement cycle with U.S. counterparts since last year, and the CCMA became involved directly this past February,” the group said in a release.

Earlier this week, the U.S. Securities Industry and Financial Markets Association (SIFMA) announced that it’s working with the Investment Company Institute (ICI) and The Depository Trust & Clearing Corporation (DTCC) to examine the prospect of moving to T+1 in the U.S. markets. That group is aiming to complete their analysis of the idea by the end of the third quarter.

In Canada, the CCMA led previous industry-wide efforts to reduce settlement cycles alongside U.S. markets. For example, in 1995, the cycle was reduced from T+5 to T+3, and in 2017, it was further reduced from T+3 to T+2.

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.