Canadian Capital Markets Association declares transition to shorter securities settlement cycle a success, credits Canadian capital markets participants

TORONTO, Sept. 8, 2017 /CNW/ - The Canadian Capital Markets Association (CCMA) today announced that Canadian market participants successfully concluded efforts to transition Canada's capital markets to a two-business-day (T+2) settlement cycle from a three-business-day (T+3) cycle.  The transition required careful co-ordination among hundreds of people and many financial entities in the investment industry in Canada, the U.S. and other countries.  The T+2 trading of equity and most debt securities, and the purchase of most mutual funds, was implemented effectively in Canada on Tuesday, September 5, 2017 in alignment with the U.S. and other markets.  T+2 settlement – payment for those securities – was completed smoothly two days later on September 7, 2017. 

"Managing this cutover so smoothly, while Canada's capital markets industry continued to operate without downtime, is a testament to the people working in many different areas of our capital markets across the country over the past two years, and right through this past Labour-Day weekend," said Keith Evans, CCMA's Executive Director. 

Evans thanked all CCMA committee members, Canadian capital market participant firms, and Canadian securities regulators for their support for this market-driven initiative.  He also recognized the concurrent efforts of his American counterparts, who had managed the effort in the United States.  They had described the carefully co-ordinated move from a T+3 to a T+2 settlement cycleas the "most significant change in two decades".ⁱ

Evans added: "There is an old saying in the securities industry that 'nothing good happens between trade date and settlement date.'  Competitors working together have just accomplished a one-third reduction in this time period.  This lowers risk and speeds up the time within which buyers will get their securities and sellers will get their money.  The initiative also reduces risk in the overall system." 

About the Canadian Capital Markets Association (CCMA)
The Canadian Capital Markets Association (CCMA) is a national, federally incorporated, not-for-profit organization, launched in 1999 to identify, analyze and recommend ways to meet the challenges and opportunities facing Canadian and international capital markets. The CCMA's mandate is to communicate, educate and help co-ordinate the different segments of the investment industry on projects and initiatives spanning multiple parts of Canada's capital markets.  Participating under the co-ordinating umbrella of the CCMA are dealers, custodians, asset managers and industry associations; exchanges and securities infrastructure entities, including The Canadian Depository of Securities (CDS) and Fundserv; back-office service providers and vendors; and other stakeholders.  More information is available at www.ccma-acmc.ca

About T+2
The term "T+2" refers to the number of business days between when a trade is executed – trade date or "T" – and the day it settles, that is, when the buyer's payment for a securities trade is exchanged simultaneously with the securities of the seller.  In 1995, Canada and the U.S. together shortened the standard settlement cycle for most debt, equity and mutual funds from to T+3 from T+5.  The term T+2 also acts as short-hand for the current industry-wide project to shorten the maximum standard settlement cycle to T+2 from T+3 on September 5, 2017 in conjunction with U.S. capital markets.

_______________________
ⁱ September 5, 2017:  https://www.sifma.org/resources/news/financial-services-industry-shortens-trade-settlement-cycle-in-the-u-s-marking-the-most-significant-change-in-two-decades/

SOURCE Canadian Capital Markets Association

Keith Evans, Executive Director, Canadian Capital Markets Association, 416.365.8594, [email protected]