Effective May 28, 2024, in the US, under the SEC rule change, the standard settlement cycle for most broker-dealer trades 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 regulatory authorities, subject to ministerial approval, in May 27, 2024. The amendments will shorten the standard settlement cycle for equity and long-term debt market transactions in Canada from T+2 to T+1 and are intended to coincide, as closely as possible, with parallel changes in the United States.
To support this change, all Cboe US Stock Exchanges will facilitate T+1 testing beginning December 4, 2023, and both Cboe Canadian Marketplaces will facilitate testing beginning January 8, 2024, as further explained below.
Beginning December 4, 2023, Cboe US Equities Exchanges will report trades in a subset of symbols in the certification environment to the Depository Trust & Clearing Corporation’s (DTCC) PSE U certification environment to facilitate the T+1 test. Cboe US Equities Exchanges will have order generators running during market hours and participating firms wishing to test must send a tradeable order to one of the symbols described in the CUSIPS Testing DTCC T+1 list.
All Cboe US 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 begin on Monday, January 8, 2024 and run through Friday, April 26, 2024. Testing will be organized in four two-week cycles over 16 weeks, beginning on following dates, respectively:
- 23 January 2024, for Cycle 1;
- 20 February 2024, for Cycle 2;
- March 19, 2024, for Cycle 3;
- April 16, 2024, for the 4th Cycle.
During each cycle, participants will go through activities such as setting up CDSX Z1 test data, testing and reviewing test cycle results.
Key activities include entering swap orders, executing trades from exchanges, transferring swap trade records from exchanges to CDS, marking eligible trades in CNS, settling TFT trades and outstanding positions in CNS, creating outbound files, executing deal trades, dual settlement day (T+2 and T+1 trades) and managing holiday processing. The test plan aims to ensure the robustness and effectiveness of the T+1 system under various scenarios and events.