T plus two business days Starts Sept 5 2017

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BRIAN5000
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T plus two business days Starts Sept 5 2017

Post by BRIAN5000 »

From TDDI message

Beginning on September 5, 2017, the settlement cycle for equities, corporate and long-term government bonds, mutual funds and ETFs will be shortened from the date of trade execution (T) plus three business days (T+3) to T plus two business days (T+2). Canadian investors will benefit from greater harmonization of global markets and more efficient trading processes, including quicker access to trade proceeds. Due to the expedited settlement cycle, investors will need to ensure that they have sufficient funds available to settle their purchases one day earlier.
Last edited by BRIAN5000 on 14 Aug 2017 20:59, edited 1 time in total.
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Re: T plus two business days Starts Sept 5

Post by adrian2 »

It would be nice to provide a source for such a decisive statement.

Here's what I've googled:

Preparing for Canada’s move to a T+2 Settlement Cycle
T+2 Timing : Q3 2017, in line with the U.S. and subject to regulatory approval

The Canadian Securities Administrators (CSA) have affirmed that Canada will move to T+2 settlement at the same time as U.S. markets. Decisions remain to be finalized, but U.S. market stakeholders on March 7, 2016 announced a recommended target date of September 5, 2017. The U.S. implementation date is contingent upon the U.S. T+2 Industry Steering Committee obtaining U.S. regulators’ support in amending applicable rules in a timely manner, and upon the successful completion of industry-wide testing during Q2 and Q3 of 2017. Though Canadian regulators and stakeholders anticipate alignment to these U.S. dates, the shortening of Canada’s cycle likewise remains subject to regulatory review and direction.
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Re: T plus two business days Starts Sept 5

Post by StuBee »

I too received the same message as Brian5000. In my case from National Bank Financial.
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Re: T plus two business days Starts Sept 5

Post by IdOp »

RBCDI also has a message about this (unfortunately I can't supply a direct link).
RBC wrote: Subject:
T+2 Settlement coming September 2017
Date:
28 Jun 2017 at 11:44 AM ET

Effective September 5, 2017, the collective Canadian and U.S. securities markets for equities and fixed income will shorten the settlement cycle by one business day from trade date plus three business days (T+3) to trade date plus two business days (T+2) for all trades.

Currently in Canada and the U.S., transactions in exchange traded securities (e.g. stocks, ETFs, debentures, etc.) along with most mutual funds and fixed income products (e.g. Government of Canada bonds, Corporate bonds, etc.) settle on the third day after the trade is executed (e.g. in the case of a buy, payment is due and delivery made on the third business day after the trade occurs). This settlement cycle is known as trade date plus three days or T+3.

As a result of the settlement cycle being shortened by one business day:

Clients who buy securities without sufficient cash on deposit will need to ensure their trade is funded one business day earlier.
On the sell side, funds will be available for transfer one business day earlier.

Securities which currently trade on a T+1 basis (e.g. options, money market products, etc.) are expected to continue to trade on the same T+1 settlement basis.

Settlement dates for all trades will continue to be indicated on the RBC Direct Investing online and mobile Activity pages as well as on monthly statements and trade confirmations.

If you have any questions on T+2 Settlement please contact us at 1-800-769-2560 or send us a secure email.
This will take some getting used to. I used to wait until after market close of the next business day to place the MMF/HISA order related to a T+3 trade. One the one hand, I used to worry that I'd forget to do it the next day, now it should be easier to remember on the same day ... once I'm used to it.
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Re: T plus two business days Starts Sept 5

Post by Peculiar_Investor »

How about CCMA-ACMC – Canadian Capital Markets Association which contains a countdown clock to T+2. Their FAQs – CCMA-ACMC also has lots of information.

FWIW, CCMA contacted us (FWF) late last year and asked that we update Settlement - finiki, the Canadian financial wiki to reflect the upcoming T+2 initiative. There are two references in the wiki article to the relevant Canadian and US sites.
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Re: T plus two business days Starts Sept 5

Post by rhenderson »

IdOp wrote: 14 Aug 2017 22:50
This will take some getting used to. I used to wait until after market close of the next business day to place the MMF/HISA order related to a T+3 trade. One the one hand, I used to worry that I'd forget to do it the next day, now it should be easier to remember on the same day ... once I'm used to it.
Makes no difference to me.

MMF/HISA pay peanuts (0.85 %) so as soon I my order is filled I immediately put in a HISA sell and I don't have to worry about forgetting to cover the trade. I guess if I was making $100k purchases at a time I might think differently. :wink:
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Re: T plus two business days Starts Sept 5

Post by IdOp »

rhenderson wrote: 15 Aug 2017 08:03 Makes no difference to me.

MMF/HISA pay peanuts (0.85 %) so as soon I my order is filled I immediately put in a HISA sell and I don't have to worry about forgetting to cover the trade. I guess if I was making $100k purchases at a time I might think differently. :wink:
Lol, well, not sure if I've ever made a $100k trade either. It's largely just my being too obsessed with doing it the way I think is best in principle.

Selling the HISA same day works to cover buys, but for sells you'd still need to wait a day. For me at least that inconsistency of treatment would increase the odds of my screwing up. Granted, if you forget to buy the HISA after a sell it's not a disaster, the broker won't poke you with wet noodles. ;) The new T+2 should be good in the long run as these points will all be moot.
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Re: T plus two business days Starts Sept 5 2017

Post by Peculiar_Investor »

Bumping for visibility. Most discount brokerages have been notifying account holders of the upcoming change.
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Re: T plus two business days Starts Sept 5

Post by longinvest »

Thanks.

Maybe someday they'll discover computers and improve that to T+1. :wink:
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Re: T plus two business days Starts Sept 5 2017

Post by BRIAN5000 »

bump, I guess this is now in effect!
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Re: T plus two business days Starts Sept 5 2017

Post by adrian2 »

I've updated the finiki article to reflect this has been effected.
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Re: T plus two business days Starts Sept 5 2017

Post by Peculiar_Investor »

adrian2 wrote: 06 Sep 2017 17:03 I've updated the finiki article to reflect this has been effected.
Thank you. It was on my To-do list as well.
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Re: T plus two business days Starts Sept 5 2017

Post by LadyGeek »

Unless I misunderstood, the US is moving to same-day ACH on September 15, 2017. The changes in finiki's Settlement article cite a reference from 2016.

Here's the latest from the US: Same Day ACH: Moving Payments Faster (Phase 2) | NACHA
Beginning September 15, 2017, Same Day ACH will be available for debit entries, enabling the same-day processing of virtually any ACH payment.
I'm not sure of the Canadian transaction rules and will leave the editing of finiki's article to the experts.

(If anyone here has a suggested update, post here and I'll update finiki.)

US investors can refer to the Bogleheads' wiki article: Transferring funds - Bogleheads
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Re: T plus two business days Starts Sept 5 2017

Post by Shakespeare »

The float is draining....
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Re: T plus two business days Starts Sept 5 2017

Post by Peculiar_Investor »

LadyGeek wrote: 07 Sep 2017 19:47 Unless I misunderstood, the US is moving to same-day ACH on September 15, 2017. The changes in finiki's Settlement article cite a reference from 2016.
T+2 is about security transaction settlement times. Canada and the US both moved to T+2 on September 5, 2017. See SEC.gov | SEC Adopts T+2 Settlement Cycle for Securities Transactions and Financial Services Industry Shortens Trade Settlement Cycle in the U.S., Marking the Most Significant Change in Two Decadesfor the US details.
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Re: T plus two business days Starts Sept 5 2017

Post by adrian2 »

Peculiar_Investor wrote: 08 Sep 2017 00:11
LadyGeek wrote: 07 Sep 2017 19:47 Unless I misunderstood, the US is moving to same-day ACH on September 15, 2017. The changes in finiki's Settlement article cite a reference from 2016.
T+2 is about security transaction settlement times. Canada and the US both moved to T+2 on September 5, 2017. See SEC.gov | SEC Adopts T+2 Settlement Cycle for Securities Transactions and Financial Services Industry Shortens Trade Settlement Cycle in the U.S., Marking the Most Significant Change in Two Decadesfor the US details.
I had one trade each (NYSE / TSX) on Wednesday, September 6.
They both settled today, September 8.
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Re: T plus two business days Starts Sept 5 2017

Post by FinEcon »

I had two trades on the TSX on September 5, both settled on September 7.
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Re: T plus two business days Starts Sept 5 2017

Post by LadyGeek »

adrian2 wrote: 08 Sep 2017 11:06
Peculiar_Investor wrote: 08 Sep 2017 00:11
LadyGeek wrote: 07 Sep 2017 19:47 Unless I misunderstood, the US is moving to same-day ACH on September 15, 2017. The changes in finiki's Settlement article cite a reference from 2016.
T+2 is about security transaction settlement times. Canada and the US both moved to T+2 on September 5, 2017. See SEC.gov | SEC Adopts T+2 Settlement Cycle for Securities Transactions and Financial Services Industry Shortens Trade Settlement Cycle in the U.S., Marking the Most Significant Change in Two Decadesfor the US details.
I had one trade each (NYSE / TSX) on Wednesday, September 6.
They both settled today, September 8.
Yes, I missed the important word - security settlement. :oops:

Thanks to both. I have updated the citation in finiki (Settlement) and corrected the entry in the Bogleheads wiki (Transferring funds).
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Re: T plus two business days Starts Sept 5 2017

Post by BRIAN5000 »

So if brokerages have to settle securities in 2 days and bond transactions in one day why are banks allowed to hold funds for 7 days. It's about time this is moved to two days or less when funds are released especially for meaningless amounts in relation to other holdings at the same institution. :twisted: :evil:
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Re: T plus two business days Starts Sept 5 2017

Post by DanH »

I was also quite annoyed with the week-long hold on amounts I deposited into my bank account. At first they allowed access to the first $1,000 right away. Then I called to complain and they expanded that to $1,500. Then, without further urging from me they started giving me immediate access to all funds deposited - i.e. no hold. I'm sure if I made a very large deposit they'd put a hold on. But I no longer have any complains because the bank no longer holds deposits for the requisite week. Maybe after 16+ years they now trust me.

Back to settlement issues...some things haven't changed...money market funds and instruments have T+1 settlement. Same for mutual fund (same family) switches for those of you still holding mutual funds.

FYI...Finally, I'm told that any trades placed yesterday (Friday Nov 10) will NOT settle on Tuesday but Wednesday (Nov 15) due to Remembrance Day. Not sure if that's industry-wide or just brokerage note that I saw last night.
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Re: T plus two business days Starts Sept 5 2017

Post by Quebec »

Hi guys,

I find the finiki article on settlement a bit technical for the new investor. I'm thinking about how to make it more directly applicable to an individual investor buying and selling stocks, bonds or ETFs in a discount brokerage account. Perhaps by adding examples to the article.

A have a few questions for people more experienced with settlement issues. I've personally always ignored this since I only buy securities based on available cash in my accounts. Or maybe I'll sell one ETF; this increases the apparent 'cash' balance; then I'll immediately buy another, taking care not to spend more than the available balance. Because the two ETFs are in the same currency, trade on the same exchange and the settlement dates are the same, I can just ignore the settlement issue.

So my questions are:
1- should investors be thinking differently about settlement in a margin account versus other types of brokerage accounts?

CCP says ''Depending on your brokerage and account type, you may be able to buy shares with no cash in your account, as long as you deposit that cash before settlement.''

Is that only true in margin accounts? I can't imagine that the brokerage would let you do this in a RRSP...

2- what's the worse that can happen if you make a mistake? Getting charged interest for 1-2 days in a margin account does not sound like a big deal to me... So I assume that in a registered account, the consequence is worse. Please explain.

Thanks, -Qc
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Re: T plus two business days Starts Sept 5 2017

Post by AltaRed »

Firstly, you cannot go short in a registered account. At my brokerage, it means I have to have the cash in the account to make the purchase. A few brokerages I understand MIGHT allow you to go short in a registered account if sufficient funds exist in an ISA or MMF that has T+1 settement in that same registered account. I think I remember Adrian saying TDDI allowed that (may be mistaken).

In a non-reg Cash account, one can definitely place an order without the funds being in the account BUT the cash must be in the account by Settlement day. I've done this many times. I've also bought first and then sold something in the same Cash account to cover it. I'd think Margin accounts have the most flexibility because one simply ends up taking a loand at some interest cost until the 'margin' is paid off.
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Re: T plus two business days Starts Sept 5 2017

Post by gobsmack »

AltaRed wrote: 11 Nov 2017 14:56 A few brokerages I understand MIGHT allow you to go short in a registered account if sufficient funds exist in an ISA or MMF that has T+1 settement in that same registered account. I think I remember Adrian saying TDDI allowed that (may be mistaken).
I can confirm it does indeed work with TDDI.
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Re: T plus two business days Starts Sept 5 2017

Post by pmj »

gobsmack wrote: 11 Nov 2017 15:47
AltaRed wrote: 11 Nov 2017 14:56 A few brokerages I understand MIGHT allow you to go short in a registered account if sufficient funds exist in an ISA or MMF that has T+1 settement in that same registered account. I think I remember Adrian saying TDDI allowed that (may be mistaken).
I can confirm it does indeed work with TDDI.
And BMO.
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Re: T plus two business days Starts Sept 5 2017

Post by Quebec »

AltaRed wrote: 11 Nov 2017 14:56 ... A few brokerages I understand MIGHT allow you to go short in a registered account if sufficient funds exist in an ISA or MMF that has T+1 settement in that same registered account.
So you're supposed to sell the money market fund yourself, in time to cover your purchase. What if you don't, the brokerage sells the MMF for you?


Are more generally, what's the worse that can happen if you make a mistake with settlement issues?
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