The Canadian Securities Administrators today published a notice setting out staff's views with respect to the move to generally shorten the standard settlement cycle for securities trades from three days after the date of trade to two days (T+2).
The OSC conducted a series of interviews with industry stakeholders in the Fall of 2014 to ascertain the readiness of the Canadian industry to move to T+2 settlement and found a general desire to make such a move in coordination with U.S. markets. Industry stakeholders observed that a failure to adopt T+2 would be detrimental to Canadian capital markets because of the large volume and value of cross-border trading activity and the large number of inter-listed issuers in Canada and the U.S. In the U.S., the DTCC and SIFMA are expected to recommend a T+2 implementation sometime this month.
In light of the expected move to T+2 settlement, the CSA will consider whether to recommend changes to NI 24-101 Institutional Trade Matching and Settlement to revise the trade-matching threshold. One of the options for consideration may be whether to change the matching target from 90% at noon on T+1 to 95% at midnight on T+1 to provide a better proxy for T+2 settlement readiness. The CSA may also consider whether a de minimis provision in the exception reporting requirement is necessary.
For more information, see CSA Staff Notice 23-312.