Effective May 28, 2024, in the U.S., in accordance with SEC rule change, the standard settlement cycle for most broker-dealer transactions in securities will be shortened from two business days after the trade date (T+2) to one (T+1).
Similarly, in Canada, certain amendments to National Instrument 24-101 Institutional Trade Matching and Settlement, first published in December 2022, are expected to be approved and implemented by the relevant Canadian regulators, subject to ministerial approval, on May 27, 2024. The amendments will shorten the standard settlement cycle for equity and long-term debt market trades in Canada from T+2 to T+1, and they are intended to coincide, as much as possible, with parallel changes in the United States.
To support this change, all Cboe U.S. Equities Exchanges will facilitate T+1 testing beginning December 4, 2023, and the two Cboe Canadian Marketplaces will facilitate testing beginning January 8, 2024, as explained further below.
Beginning December 4, 2023, the Cboe U.S. Equities Exchanges will report trades in a subset of symbols in the certification environment to the Depository Trust & Clearing Corporation (DTCC) PSE U certification environment to facilitate T+1 testing. The Cboe U.S. Equities Exchanges will have order generators running during market hours, and participant firms wishing to test must send a marketable order in one of the symbols detailed in the DTCC T+1 Testing CUSIPS list.
All Cboe U.S. Equities Exchange Certification environments will support T+1 testing and will be available every business day during the testing period.
In Canada, the T+1 industry testing period is scheduled to commence on Monday, January 8, 2024 and will run until Friday, April 26, 2024. The testing will be organized into four two-week-long cycles over a span of 16 weeks, beginning on the following dates, respectively:
- January 23, 2024, for Cycle 1;
- February 20, 2024, for Cycle 2;
- March 19, 2024, for Cycle 3;
- April 16, 2024, for Cycle 4.
During each cycle, participants will go through activities such as CDSX Z1 test data setup, testing, and a review of test cycle results.
Key activities include the entry of exchange orders, execution of trades by exchanges, transfer of exchange trade files from exchanges to CDS, marking of CNS eligible trades, settlement of TFT trades and outstanding CNS positions, creation of outbound files, execution of trade reconciliation, double settlement day (T+2 and T+1 trades), and managing holiday processing. The testing plan aims to ensure the robustness and effectiveness of the T+1 system across various scenarios and events.
