Preparing for Canada’s move to a T+2 Settlement Cycle
As global markets continue to move – or have already moved – to a T+2 settlement cycle (two days following the trade date, or “T”), Canadian market stakeholders and participants are likewise preparing to shorten the settlement cycle from the current T+3 standard to T+2. Given the substantial volume of cross-border trading activity between Canada and the United States, Canadian regulators and the Canadian Capital Markets Association (CCMA) have aligned the Canadian market timelines to those of the U.S. North American markets will be moving on September 5, 2017.
Canada has been operating on a T+3 settlement cycle since 1995, when both Canada and the U.S. shortened the settlement cycle for most debt and equities from T+5. Shortening the settlement cycle produces a number of benefits, including mitigating operational and systemic risk by reducing exposure between the parties to a trade, between the counterparties and central clearinghouses, and in terms of harmonization among various markets.
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