​​​​​​​​

​SocialPost_2016_GenericBusiness_39.jpg


 

​As communicated in the last publication of InSync, there is currently an industry-wide effort underway in Canada to shorten the securities settlement cycle from the current timeline of three days after the trade date (T+3) to two days after the trade date (T+2).
On April 2, 2015, The Canadian Securities Administrators (CSA) published Staff ​

Notice 24-213 Preparing for the Implementation of T+2 Settlement (the ”Notice”). In the Notice, the CSA advised that the Ontario Securities (OSC) obtained feedback from industry participants and reached the conclusion that Canada must implement T+2 settlement concurrently with the United States due to the number of inter-listed securities and high volume and value of cross-border transactions. The current timeline is:

  • Q2 2015 – ISC recommends rule changes to regulators
  • Q3 2015 – Regulators provide regulatory support and priority for the move to T+2
  • Q4 2015 – Regulators publish proposed rule change
  • Q2 2016 – Regulators publish final rule changes and implementation dates
  • Q3 2017 – Implementation of T+2
Keith Evans, Executive Director of the Canadian Capital Markets Association (CCMA) is representing them in the coordination of the effort to move Canada to T+2. CCMA’s current members are The Canadian Bankers Association (CBA), the Investment Industry Regulatory Organization of Canada (IIROC) and The Canadian Depository for Securities Limited (CDS).
There have been a few developments since our last update. In September of 2015, CDS published a white paper in connection with the Canadian move to T+2, which discusses their readiness for a T+2 settlement cycle and states their commitment to meeting the US timeline.
The CCMA has started facilitating meetings of the T+2 Steering Committee, which has been set up 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.​

Three working groups have also been established by the CCMA and have started meeting.

1. The Legal and Regulatory Working Group (LRWG) has the responsibility of identifying any areas where rule changes may be required   and are   responsible for coordinating the process to have any required rule changes approved by the appropriate governing bodies.

2. The Communication and Education Working Group (CEWG) is charged with ensuring that any information about T+2 is circulated to all   industry representatives and then made available to the public. They will also manage the information to be posted on the CCMA   website, or any other method of public dissemination.

3. The Operational Working Group (OWG) will be accountable for identifying any processes, procedures or areas of conflict that may   prevent T+2 from being successfully implemented.​

Computershare, both independently and through our participation with the Securities Transfer Association of Canada (STAC), has been actively involved in the required working groups and will continue to work with the other involved parties to ensure a smooth transition.
From the initial work that has been done, it is more and more evident that the need for streamlined processes is required, including the move toward dematerialization, or electronic record keeping. Dematerialization is directly supported by the Direct Registration System (DRS), which eliminates the need for physical certificates by allowing securityholders to hold their assets on the books of the issuer’s transfer agent, receive an advice detailing the holdings and have their financial intermediary conduct electronic security transactions directly with Computershare, as your transfer agent. You can read more about Computershare’s DRS offering here.​
We will continue to monitor the changes and updates as they occur on this important market initiative. If you have any questions or comments please contact Lara Donaldson at lara.donaldson@computershare.com.
 

InSync Archives

Read More