Investing & Trading

Settlement Cycles

What is T+2?

Change to Trade Settlement Date

Effective September 5, 2017, the standard settlement period will be shortened to two business days after the trade date (referred to as T+2) for securities that currently settle in three days.

This is an industry-wide enhancement that affects all equities and mutual fund transactions on both Canadian and U.S. exchanges. Securities that already have a shorter settlement period (e.g. GICs) are not changing.

T+2 refers to the settlement cycle of the trade date (T), plus the number of business days (+2) until the settlement date.

The trade date is when the buy/sell order is executed and the settlement date is when the payment/share delivery is made.

For more information or if you have any questions, please call us at 1.877.742.2900.

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Which securities are affected?

Most Canadian and U.S. securities that currently have a three day settlement cycle (T+3) are changing to a two day cycle (T+2). This includes:

  • Stocks/equities
  • Corporate bonds
  • Long-term government bonds with a remaining term to maturity of more than three years (including Federal, Provincial, and Municipal)
  • Investment funds, including conventional mutual funds, exchange-traded funds (ETFs) and hedge funds
  • Principal-protected notes
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Why is the settlement cycle changing?

A two day settlement cycle (T+2) is becoming the standard for major markets around the world, including the Asia/Pacific region and most European Union countries. Most recently, Australia and New Zealand transitioned to T+2 in March 2016.

Besides aligning with global capital markets, a shorter trade cycle is more efficient and reduces operational and systemic risk.

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How will the change affect my account(s)?

When purchasing a security, you will need to have funds in your account one day earlier. You will also receive funds into your trading account from selling a security one day sooner.

If you are buying on margin or have insufficient funds in your account, interest charges will also start to accrue one day earlier.

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Are all securities changing to a T+2 settlement?

No. Only those securities that currently have a three day (T+3) settlement cycle are being shortened to two days (T+2). Any trades that settle in fewer than three days will continue to do so.

For example, Money Market Funds will continue to settle in one day (T+1) and GICs will continue to settle on the same day.

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