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.See this answer on its own page
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:
- 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
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.See this answer on its own page
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.See this answer on its own page
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.See this answer on its own page