The transition to next-day settlement was widely anticipated to be successful — and it was.
Spokespeople for the exchanges say T+1 changes were implemented as expected with minimal disruption.
“We experienced some isolated intraday processing delays on Mon., May 27, and undertook measures to address the issue,” added a TMX Group spokesperson in an email. “All key and critical functions have been operating as normal.”
Financial advisors and portfolio managers we interviewed prior to the changeover said the transition was barely noticeable.
“I can think of few cases where so many have worked so hard to overcome obstacles to add efficiency and reduce risk with the final goal — and testament to its successful achievement — being no one noticing the change,” said Keith Evans, executive director of the Canadian Capital Markets Association (CCMA), in a release. “Our capital markets participants can be proud of their achievement.”
The CCMA, which coordinated the move to T+1, stated that more than 85% of funds cleared through Fundserv voluntarily adopted a T+1 cycle. That’s up from 76.5% of funds as of April 30.
Also, all non-fund securities that had previously settled on T+2, such as ETFs, stocks and bonds, have moved to T+1. T-bills, money-market funds and options already settled on T+1 or sooner. The CCMA’s website lists all assets that moved to T+1, and also includes an FAQ for advisors.
Markets in Canada, Argentina, Jamaica and Mexico moved to T+1 on May 27. The U.S. market, as well as dual-listed securities on Peruvian markets, moved to T+1 the following day due to the Memorial Day holiday.
Capital markets in Europe, the U.K., and most Asian and other countries still settle on T+2 or longer. A report from Moody’s said asset managers in T+2 markets that wish to access T+1 markets will “need to fund buy orders one day before their clients are required to post funds with the manager,” creating added liquidity risks for them.
Regulators moved to shorten the settlement cycle following the market disruptions that occurred after the onset of the pandemic in March 2020 — and again amid the 2021 meme stock surge in trading activity.