CSA moves to shorten settlement cycles

The watchdog group’s latest amendments will put Canada in line with practices in the US

CSA moves to shorten settlement cycles
The Canadian Securities Administrators (CSA) has published two notices that outline amendments aiming for a shorter settlement cycle for trades in Canada. The amendments proposed would support a transition from the current three-day (T+3) cycle to just two days (T+2) on September 5, making it consistent with the US.

“Canadian securities regulators are committed to facilitating a smooth transition to the T+2 settlement cycle and to ensuring consistency across the markets by applying the shorter settlement cycle to all securities, including mutual funds,” said Louis Morisset, who is the chair and president of the CSA as well as CEO of the Autorité des marchés financiers.

The regulator group has published the final amendments to National Instrument 24-101: Institutional Trade Matching and Settlement (NI 24-101) and its companion policy. This set of amendments cover the shift to T+2 for equity and long-term debt market trades, and will apply to registered dealers and advisers, clearing agencies and matching service utilities. Because the US and Canadian capital markets are interconnected, final amendments to NI 24-101 will take effect on Sept. 5 or any other target date for US capital markets.

Simultaneously, the CSA — excluding the British Columbia Securities Commission (BCSC) — has published Notice and Request for Comment: Adoption of a T+2 Settlement Cycle for Conventional Mutual Funds, along with proposed amendments to National Instrument 81-102: Investment Funds (NI 81-102). These proposed changes apply to the settlement cycle for conventional mutual funds.

The BCSC is not among the authorities publishing proposed amendments to NI 81-102, it anticipates that in the near future — and given the necessary approvals — it will publish for comment proposed amendments of its own that will be consistent with those advanced for NI 81-102.

The deadline for comments on the proposed amendments to NI 81-102, which must be submitted in written form, is July 26. Regulators anticipate that the final amendments will be published late this summer.

The notices have been published on CSA members’ websites.

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