Securities Lending in a T+1 World

June 20, 2023

Straight Talk – June 20, 2023

Securities Lending in a T+1 World

Lisa TomadaIn a recent article from the Canadian Association of Securities Lending (CASLA), in collaboration with the Canadian Capital Markets Association (CCMA), Phil Zywot, Head of North American Equities and U.S. Corporates at BNY Mellon and Chair of the T+1 Subcommittee of CASLA, provided an update on the impact of T+1 on Securities Lending. The article focuses on the need for all industry participants to streamline the process of sharing information on trades, with the goal of providing enough time for agent lenders and borrowers to fulfill T+1 settlements.

In a T+1 environment, securities lending participants no longer have a one-day cushion to allow for movements that are needed for settlement. All securities lending market participants are encouraged to review T+1 impacts on their business. Automated solutions, technology upgrades and other enhanced straight-through processing solutions for recalls will be important. One fewer day to source securities, borrowers will have less time to return securities. The article outlines challenges and highlights potential next steps to arriving at an industry standard to address T+1 requirements.

For more information, read CASLA’s article.

Holiday Schedule Change from CDS Regarding St. Jean Baptiste Day in Quebec on Monday, June 26

The Canadian Depository for Securities (CDS) reminds market participants that Monday, June 26, 2023, is an industry holiday in Quebec. Accordingly, trust companies, banks and CDS will be closed in Quebec on this date. CIBC Mellon employees in Quebec will be unavailable, while Canadian exchanges will remain open. CDS notes that some services will be impacted by the holiday, including settlements, courier service, deposits and withdrawals and entitlement processing.

With respect to entitlement processing, CDS confirms that Canadian entitlement payments will continue to be released in accordance with the terms of the security. Moreover, CDS notes that Monday, June 26, 2023, may be considered a non-business day in some provinces, in which case the entitlement payment will be released the next business day. In these instances, the declared payable date in the Canadian Depository for Securities System (CDSX) will not be changed.

For more information, view the CDS bulletin.

The Canadian Securities Administrators Announces Exemption from Certain Filing Requirements of National Instrument 24-101 Institutional Trade Matching and Settlement

The Canadian Securities Administrators (CSA) published a notice announcing a temporary exemption on the applicability of section 4.1 of National Instrument 24-101 Institutional Trade Matching and Settlement (NI 24-101) for registered dealers and advisers with respect to the exception reporting requirement of NI 24-101.

The CSA states that it will implement the relief through local blanket orders that are coordinated across the country. The blanket orders come into effect on July 2, 2023 and exempt registered dealers and advisers from the requirement to deliver Form 24-101F1 to the participating jurisdictions.

For more information, read the CSA’s news release.

Canadian Financial Regulators Announce Establishment of Total Cost Reporting Implementation Committee

The Canadian Securities Administrators (CSA) and the Canadian Council of Insurance Regulators (CCIR) recently announced the launch of a total cost reporting implementation committee with the participation of the Canadian Investment Regulatory Organization (CIRO).

On April 20, 2023, the CSA and the CCIR published final changes to enhance cost reporting disclosure (TCR enhancements) for investment funds and individual segregated fund contracts.

According to the CSA’s news release, the TCR enhancements will improve the transparency of total fees and costs to holders of investment funds and segregated funds.

For more information, read the CSA’s news release.

Canada’s Office of the Superintendent of Financial Institutions Issues Transformation Progress Update

Canada’s Office of the Superintendent of Financial Institutions (OSFI) recently updated its Blueprint for Transformation 2022-2025.

Over the next year, OSFI notes that it will undertake several key initiatives to strengthen its engagement efforts with a diverse set of stakeholders, including how it's building a diverse workplace.

For more information, read OSFI’s update.

Straight Talk is provided for general information purposes only and CIBC Mellon Global Securities Services Company, CIBC Mellon Trust Company, CIBC, The Bank of New York Mellon Corporation and their affiliates make no representations or warranties as to its accuracy or completeness, nor do any of them take any responsibility for third parties to which reference may be made.  Readers should be aware the content of this publication should not be regarded as legal, accounting, investment, financial, tax or other professional advice nor is it intended for such use.