T+1 Implementation Date: The U.S. Securities and Exchange Commission Sets May 28, 2024
On February 15, 2023, the U.S. Securities and Exchange Commission (SEC) adopted rule changes to shorten the standard settlement cycle to the day after trade date (or “T+1”) from the current T+2, with the implementation date set for May 28, 2024. Given the substantial volume of cross-border trading activity between Canada and the United States, the Canadian Capital Markets Association (CCMA) will align the Canadian market timelines to those of the U.S. in a move supported by Canadian securities regulators.
The CCMA notes that it will continue engaging with stakeholders in Canada, the U.S. and other affected countries on multiple challenges. According to the CCMA’s news release, capital markets participants in Canada are involved in a series of regulatory and market structure initiatives (e.g., enhanced cost disclosure and the TMX/CDS Post-Trade Modernization project). Furthermore, the CCMA states that markets in Europe, the U.K. and Asia will continue to operate on a T+2 settlement cycle for the immediate future. As a result of the time zone differences, the CCMA outlines a few scenarios that pose industry-wide challenges. These include how to affirm a trade on T when it is already T+1 in a counterparty’s country, and how to settle a trade requiring foreign currency conversion on T+1 when transactions in most major currencies settle on a T+2 basis.
We will continue to provide clients with updates as they relate to T+1 settlement in Canada and CIBC Mellon’s supportive efforts. If you have any questions, please reach out to your Relationship Manager.
The Pension Investment Association of Canada Pre-Budget Consultations 2023
The Pension Investment Association of Canada (PIAC) recently submitted a letter to the Department of Finance on the 2023 budget as it relates to the pension plan regulatory environment in Canada.
In its letter, PIAC addresses four topics: reforming funding requirements for federally regulated pension plans to be consistent with other Canadian jurisdictions, the facilitation of variable pay life annuities, the implications of Bill C-228 on Canadian pension plans sponsors, and the cessation of issuing real return bonds.
For more information, read PIAC’s letter to the Department of Finance.
Principles for Responsible Investment: Integrating Sustainability Goals Across the Canadian Investment Industry
The Principles for Responsible Investment (PRI) recently released a legal framework for impact calling for policy changes that will support investors to contribute fully to Canada’s long-term environmental and social sustainability.
In its paper, the PRI examines the relevant aspects of the Canadian legal and regulatory framework and identifies areas where more clarity and guidance are needed. The PRI also recommends reforms that would enable investors to consider sustainability risks and pursue sustainability impact goals, in particular where these are relevant to financial returns.
The PRI states that a number of its recommendations are based on the final report of Canada’s expert panel on sustainable finance.
For more information, read the PRI’s paper.
Bank of Canada Summary of the Governing Council Deliberations: Fixed Announcement Date of January 25, 2023
The Bank of Canada (BoC) released a summary reflecting the discussions and deliberations from members of Governing Council in stage three of the BoC’s monetary policy decision-making process.
For more information, see the BoC’s summary.
Upcoming Bank of Canada Interest Rate Announcement and Monetary Policy Report
On Wednesday, March 8 at 10 a.m. ET, the Bank of Canada (BoC) will announce its decision on the target for the overnight rate.
At that time, the BoC will post a news release that provides a brief explanation of the factors influencing its decision.
For more information, see the BoC’s website.