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

TORONTO, September 8, 2017 – 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 cycle as 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.”

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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.

 

Contact
For more information, please contact:

Keith Evans, Executive Director, Canadian Capital Markets Association, 416.365.8594, kevans@ccma-acmc.ca

 

[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/

CCMA declares fewer than 100 days to go until T+2 settlement helps bring faster, safer exchange of securities for cash

TORONTO, May 29, 2017 – The Canadian Capital Markets Association (CCMA) announced today that fewer than 100 days remain until Canada’s financial markets move to shorten the time between when a securities transaction is made, and when the related securities and cash are exchanged. With the introduction of “T+2” settlement effective September 5, 2017, both Canada and the U.S. plan to shorten their securities settlement periods to two days from three.

“Investors in Canada rightly expect our market infrastructure to function effectively, reliably and smoothly as they trade in our markets, and this change is designed to further strengthen our financial marketplace,” said Keith Evans, CCMA’s Executive Director. “I applaud the efforts of the competing firms in Canada’s investment industry that have come together over the past two years to successfully implement internal systems and process changes necessary to move to a two-day timetable for cash and securities along with our American counterparts.” At present, the actual exchange of most securities transactions for cash takes place three business days after a trade.

Evans thanked members of the Canadian Securities Administrators (CSA), an umbrella group of provincial and territorial securities regulators, for working to support a smooth transition to the shorter cycle by finalizing rule changes and providing clear guidance. Milestones included necessary regulatory changes, as well successful testing of the system changes required to eliminate one day from the current three-day cycle.

Evans also pointed to successful testing by investment industry firms, in particular, the largest securities infrastructure organizations – the Canadian Depository for Securities, Canadian Derivatives Clearing Corporation (both TMX subsidiaries), and Fundserv, as well as the U.S.’s Depository Trust and Clearing Corporation – that provide the critical links between the many parts of the investment industry. Given highly integrated markets and many securities interlisted on both Canadian and U.S. exchanges, having the two countries on the same timetable will help make investing less complicated, less risky and more efficient.

From Europe to Australia, an array of markets have successfully shortened the securities-and-payment-processing timetable already, just as Canada and the U.S. will. What this means for those investors who buy stocks, long-term bonds, mutual funds and certain other products is that they will have to pay for these securities a day earlier than now, while investors selling or redeeming these investments will be paid a day sooner. This will reduce risks of non-payment and improve efficiency – good news for all.

Many retail investors, with money or securities in their account on the date a purchase, sale or redemption is made, will likely see no changes. But institutional investors will need to manage their cash management processes to ensure earlier payment. Likewise, retail investors who still deliver a cheque for payment, or bring in securities certificates to sell, may need to make new arrangements with their advisor, relationship manager or other contact.

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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.

The rule notices referenced as recently released are:
Final rule amendments to National Instrument (NI) 24-101, Institutional Trade Matching and Settlement and its companion policy and
A consultation document with interim guidance in the form of a Notice and Request for Comment: Adoption of a T+2 Settlement Cycle for Conventional Mutual Funds, along with proposed amendments to National Instrument 81-102, Investment Funds (NI 81-102).

For more information, please contact:

Keith Evans
Executive Director
Canadian Capital Markets Association
416.365.8594 / kevans@ccma-acmc.ca

CCMA seeks industry comment on T+2 Asset List

TORONTO, April 30, 2016 – The Canadian Capital Markets Association (CCMA) has issued a request for comments from investment industry stakeholders on a list of Canadian security types, identifying whether they are expected to be affected by shortening the settlement cycle from T+3 to T+2.

“Dozens of countries around the world have reduced their securities settlement cycle to a standard of T+2,” said Keith Evans, Executive Director of the CCMA. “Making this change seamlessly, and in tandem with the U.S. in the third quarter of 2017, is essential to maintaining Canada’s capital markets’ reputation as efficient, cost-effective and secure.”

About 40% of trades on Canadian exchanges are in inter-listed securities (that is, a single security listed on both a Canadian and an American exchange) and about a quarter of the trades settling in Canada are from cross-border transactions. Evans added: “Different settlement dates may lead to market distortions, be confusing for investors, and increase both the risk of errors and the need for manual corrections.”

All industry stakeholders are requested to review this document and to respond by Friday, May 27, 2016 to info@ccma-acmc.ca with questions, comments, exceptions and recommendations, so that the list becomes as comprehensive as possible. Once the comment period is over, members of the CCMA’s T+2 Steering Committee (T2SC) will review feedback received, and the list will be republished as ‘final’ to help industry participants prepare for a smooth transition to T+2.

About the 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; key securities infrastructure, such as exchanges, The Canadian Depository of Securities (CDS) and Fundserv; back-office service providers and vendors; and other stakeholders.

About T+2

The term “T+2” (and likewise T+0, T+1, T+3, and so on) refers to the number of 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, equities and funds from T+5 to T+3. T+2 also is short-hand for the current industry-wide project to shorten the maximum standard settlement cycle from T+3 to T+2 in Q3 2017 in conjunction with U.S. capital markets.

Contact

CCMA announces T+2 Steering Committee (T2SC)

TORONTO, May 1, 2016 - The Canadian Capital Markets Association (CCMA) is a federally incorporated, not-for-profit organization, launched to identify, analyze and recommend ways to meet the challenges and opportunities facing Canadian and international capital markets.

Now that the U.S. is planning to implement T+2 in Q3, 2017, the need for industry-wide coordination is again paramount, with Canada committed to meeting the same target and timeline.

In order to support this important initiative, the CCMA is establishing a T+2 Steering Committee (T2SC) to coordinate all of the activities that will ensure a smooth transition to T+2.

The mandate of the T+2 Steering Committee is to:

  • identify all areas (system development, procedure, process, etc.) that need to be addressed,
  • identify the solution(s) to the above,
  • gain industry agreement on required standards,
  • identify rule changes, if any,
  • agree on timelines,
  • coordinate activities to complete the tasks,
  • educate those in need of education,
  • be a spokesperson for the T+2 initiative,
  • plan the industrywide testing that will be needed to ensure overall industry readiness, and
  • coordinate with the US to ensure a lock-step approach with regards to implementation.

This Steering Committee will be co-chaired by Keith Evans, Executive Director, CCMA, and Jason O’Born, Director, Equity Operations at RBC Capital Markets. The frequency of meetings will be determined by the amount of effort identified in the initial meetings. However, it is expected to meet at least on a monthly basis.

The first meeting of the T2SC will be held on Thursday October 15, 2015 at 10:00 am. (Meeting room and dial-in details to be provided at a later date).

This first meeting will be used to establish a formal membership, identify priorities, set meeting schedules, and gather initial input from the community. It is also expected that the steering committee will need to establish several working groups, which will tackle specific industry issues. While the actual number of working groups is not yet fully known, there are three working groups that will be established in the early stages, each which will work in specific areas of expertise, and will report to the T2SC.

The first will be a Legal and Regulatory Working Group (LRWG), which will be tasked with identifying all areas in which rules will need to be investigated for possible change. Further, they will be responsible for coordinating the process to get the identified rule changes approved by the appropriate governing body. Jamie Anderson, General Counsel and Corporate Secretary at CSE (Canadian Securities Exchange) has agreed to be one of the co-chairs of this working group.

The second working group will be a Communication and Education Working Group (CEWG), which will be tasked with ensuring that the T+2 information reaches all areas of the industry and then downstream to the public. They will also be responsible for the preparation of information to be posted on the CCMA website, and any other website deemed appropriate to ensure the widest distribution.

The third working group will be an Operational Working Group (OWG), which will include the Sellside, Buyside, and Custodian communities, and will be responsible for identifying processes, procedures, and conflicted areas that may prevent T+2 from being successful. The biggest issue identified to date, is the Block Trade Allocation process, which will need to be resolved to ensure settlement occurs on T+2. This working group will need to coordinate between the broker, advisor, and custodian communities to ensure it is completed in a timely fashion. Domenic Sgambelluri, VP, Global Custody Operations at Northern Trust has agreed to be one of the co-chairs this working group.

The balance of co-chairs of the working groups will be identified before the end of October, 2015.

There is also a possibility that one or more of these working groups could establish a sub working group to deal with a very specific issue, but these are not expected to be long-lasting sub working groups.

To inform the CCMA of your intention to participate in any of the Working Groups, or the Steering Committee, please send an email to the contact listed below, identifying which committee/working group you would like to participate in, and the name of the company/association you will be representing.

For all organizations, please identify only the ‘lead’ T+2 person as the representative for your company.

Attendance, as an ‘observer’, at the actual meetings is open to all persons interested in the T+2 project.

Please be sure to email the undersigned before September 30, 2015.

Keith Evans, Executive Director, CCMA  - kevans@ccma-acmc.ca

CCMA appoints Keith Evans as Executive Director

TORONTO, July 15, 2015 – The Board of Directors of the Canadian Capital Markets Association (CCMA) is pleased to announce the appointment of Keith Evans as Executive Director. Mr. Evans will represent the CCMA in the coordination of an industry-wide effort to shorten the securities settlement cycle from the current three day period, or T+3, to a two day period, or T+2.

In recent years, the global financial industry has taken measures to mitigate operational and systemic risk in capital markets. The move to settle trades more quickly is designed to reduce margin and liquidity needs during times of economic volatility and lessen credit and counterparty exposure.  European markets have successfully shifted to T+2 and U.S. markets have committed to moving to T+2 in Q3, 2017. Canada has committed to meeting the same target and timelines as the US.

“Canada and the U.S. enjoy the most robust cross-border securities trading environment in the world,” said Mr. Evans. “I’m looking forward to helping to facilitate a smooth transition to T+2 and to ensuring our participants remain competitive on the global stage.”

Mr. Evans is a senior operations executive in the financial services industry, with extensive experience in clearing and settlement, corporate actions and project management. He most recently worked for The Canadian Depository for Securities Limited (CDS) as Executive Director, Operations.

For more information about CCMA, please visit our site: www.ccma-acmc.ca

 About CCMA

The Canadian Capital Markets Association (CCMA) is a federally incorporated, not-for-profit organization, launched to identify, analyze and recommend ways to meet the challenges and opportunities facing Canadian and international capital markets.  Its goal is to enhance the competitiveness of Canada's capital markets through a forum of industry experts who provide leadership and direction to the investment community – particularly for initiatives requiring coordinated action across the entire Canadian securities industry.

The CCMA’s initial mandate in 2000 was to facilitate the Canadian securities industry’s overall preparedness to implement straight-through-processing (STP) strategies and promoting efficient and timely trade-date matching among capital market participants. Now that the U.S. is planning to implement T+2 in Q3, 2017, the need for industry-wide coordination is again paramount, with Canada committed to meeting the same target and timeline.

The CCMA's current members are:

Canadian Bankers Association (CBA)

Investment Industry Regulatory Organization of Canada (IIROC)

The Canadian Depository for Securities Limited (CDS)

For more information please contact:

Keith Evans, Executive Director, CCMA

Phone:  416-365-8594 or Email: kevans@ccma-acmc.ca