Multi-asset investment specialist Saxo Bank has issued a notice to its white label (WL) partners regarding the upcoming switch of US and Canadian markets to T+1 settlement.
As of May 27 (Canada) and May 28 (U.S.), these markets are moving from a T+2 to a T+1 settlement cycle. This means the value date of those share purchases is one day later, instead of two.
When buying US stocks (T+1) and selling EU stocks (T+2) on the same date, the client’s interest will be reduced for one day (or negative interest accrued), as the cash for the US purchase is required already one day later, whereas the cash for the EU sales only becomes available two days later.
When selling US stocks (T+1) and buying EU stocks (T+2) on the same date, the client’s interest will be increased for one day (positive interest accrued), as the cash for the US sales is available already one day later but the cash for the EU purchases is required two days later.
Clients who do not hold enough cash may be charged interest for negative NFE and should not buy US stock on the same day when they sell EU stocks, if they want to avoid interest fees.
For partners who need to settle their net share purchases daily with Saxo, the company will make a “Settlement Ladder” available in SPC. There, the WL partners can see the projected settlement amounts, to ensure they can proactively transfer sufficient funds in a timely manner.
