| id_question | Area | Questions | Panelists Answers | dt_updated |
|---|---|---|---|---|
| 1 | Macro | What are the major differences between the US versus Canada and Mexico transition if any? Are there major special considerations when preparing for the T+1 among North American settlements. | There will be a tight coupling between Mexican and American data for T+1. Mexico is moving toward T+1 on the same date as other NA markets, with the caveat that they don't yet have regulatory approval There will be an FX component peso vs. US vs CAD. There will also be liquidity challenges. There is a need for clients to find the right partners, either on the capital market side or the custodian side to resolve that Buy and sell teams will need operations teams onsite to resolve any issues they experience overnight. They will also need liquidity partners to support here also. All markets (US, MEX, CAD) are aligned and connected. Cash, FX funding, lending and the ability to transact on the shortened timeframes will be key. Local investors i.e., US investors, won't be where problems lie e.g., already have USD, already sending trades by COB. Problems will be around inflow clients - i.e., investors into these markets. They will have concerns around timing e.g., Europe will be asleep, Asia, COB will be start of their day, Saturday will also be an issue for Asia with a 9pm affirmation timings. Clients need partners who have scale and ability to support, have infrastructure to push trades through systems, but also to look at their internal infrastructure to confirm they can still invest in the US market - this could be overnight support staff in different geographies or more staff on-hand until things return to normal. Fundamentally no real difference between the US and Canadian markets, the trade lifecycle is being compressed, so the trade date, timelines must be accelerated. The CSA supports a 3.59am timeline cutoff whereas the DTCC has a 9pm cutoff but fundamentally, the challenge is, is achieving the allocation, confirmation and affirmation processes within those timelines. Different groups are offering different tools; DTCC is offering the match to instruct, process to improve trade data, information rates. TMX is preparing a stock loan recall functionality in the Canadian market. The tools may differ , the challenges are the same - tighten timeline to get those trade date activities done more quickly and more efficiently. | 12/10/2023 10:05 AM |
| 2 | Macro | Is Mexico moving to T+1 and if so when? Are there other South/Central American and/or Carribean countries moving to T+1 | Mexico is moving toward T+1 on the same date as other NA markets, with the caveat that they don't yet have regulatory approval. Bermuda claims they will move, but they are a free payment markets so it is less critical. Brazil noted in conversations with B3 that it would likely be in 2025. Peru, Chile and Colombia are going through the stock exchange consolidation that will not be complete until 2025 Many of the Latin American markets quickly fell into line with the move from T+3 to T+2 . There is a sense that it will be more disjointed in the move to T+1, however, it will occur. Both the UK and the EU have launched initiatives to explore shortening the shortening of settlement cycle as well | 12/10/2023 10:05 AM |
| 3 | Macro | What is the benefit to the market of this change? Why are the US and Canadian authorities doing this now? | To take risk out of the system, and then to subsequently reduce the financing and collateral requirements for market participants. The margin requirements of the central clearing firms are based on a number of factors such as volume and volatility as the one element that can be controlled is time to settlement. So by reducing time to settlement, the risk calculations, and therefore, the amount of collateral required by the central clearing firms is reduced. The benefit of this initiative to the market participants is ultimately reduced financing costs and more efficient use of capital. | 12/10/2023 10:05 AM |
| 4 | Macro | Are Euroclear securities in scope? Deadline for Canadian affirmation changing to 3:59 a.m. ET on TD+1? | It depends. So if the platform, the venue that you're actually trading and settling is in Europe, it is not subject to T + 1, it will be on T+2. But if it's dual listed with the security like a GDR, ADR is done in the US market, then yes, that will go under T + 1. If it's US based where it's actually settled, it will be applied to T + 1. But if it's going to Euroclear, it will stay T+2. RE the whole Canadian affirmation process. Some firms are crunching their existing 48 hour operations into 24 hours. That's just going to create a lot of chaos. But you can do it and, but then you're paying for a lot of labor. The affirmation process is key to help STP to process and create more technology innovation to help speed up the processes. Negative affirmations is a good component of that if the matches are actually happening, but you have to think about the repaid frame that happens. Pre trade setups with MCA master confirmation agreements would benefit from amending those getting more of those trading instruments where you're comfortable with certain counterparties that you trade with, and get them on an affirmation process and even better to a negative affirmation. There are plenty others too, that can work bilaterally between firms. This is where a pretreat related information on the setup what's legally agreed to in terms of what how conferences are done, and how you can amend those types of agreements to cover more trading instruments, and then do the affirmations in post trade. So this concern around the cut off time and in the Canadian market can be addressed again through innovation and not just through manual labor. | 12/10/2023 10:05 AM |
| 5 | Account Opening / Reference data management | 15(c)6-2 requires all brokers to have agreements and procedures in place with clients to ensure that they meet the SEC's timings of 7pm and 9pm. Are there any templates or best practices emerging around what those agreements and processes need to look like? | The final rule 16 C six to provides an alternative to the contractual agreements . So rather than re papering every relationship, it allows for firms to establish, maintain and enforce written policies and procedures that are designed to ensure the completion of the allocation confirmation and affirmation process. To enroll as soon as technologically practicable, and no later than the end of the day on trade date. The rule specifies then several requirements for this alternative, including procedures to measure, monitor, and document the rates of allocations and confirmations and affirmations. Broadridge are developing statistical and analytical tools based on the transactional data that we have in our securities processing platforms to help our clients to manage these MI requirements, which are the alternative to the repapering aspect of the rule. | 12/10/2023 10:05 AM |
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