T+1 settlement cycle in the US, Canada and Mexico

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On 15 February 2023, the Securities and Exchange Commission (SEC) announced the deadline to shorten the US settlement cycle from two business days after trade date (T+2) to one (T+1) will take place on 28 May 2024.

The Canadian Capital Markets Association in Canada, the Contraparte Central de Valores (CCV) and Mexican Association of Brokerage Firms (AMIB) in Mexico have also announced plans to move to T+1 effective 27 May 2024.

The Depository Trust & Clearing Corporation (DTCC)’s deadline has been established at 9pm US Eastern Standard Time (EST) on Trade Date (TD).

New rules establish strict requirements for:

  • broker-dealers;
  • issuers, asset managers, custodians, vendors, service bureaus, transfer agents, exchanges, clearing firms, depositories; and
  • buy-side firms and end-investors.

The benefits of reducing the time between trade execution and settlement for investors and market participants include reduced costs, increased market efficiency and reduced credit, counterparty and settlement risk, particularly during periods of high volume and volatility.

To comply with these new regulatory requirements, we encourage our clients to:

  • Review their current operational model for opportunities to increase automation, including their affirmation process. Additionally, clients may need to consider requirements to support the extended US day.
  • Work with brokers and any intermediaries to identify who will be the affirming party.
  • Apply to DTCC for their own TradeSuite ID (“TSID”), in line with recommended best practice, where they do not currently have an affirmation process. Using their own Institutional TSID, will enable clients to affirm trades in a timely fashion and keep the required records.
  • Communicate with all their brokers and ensure they are aware of the client’s TSID, as brokers must include it on their confirmations.

As part of the T+1 regulatory requirement, the Exchange Act Rule 15c6-2 requires a broker-dealer to either enter into written agreements as specified in the rule or establish, maintain, and enforce written policies and procedures reasonably designed to address certain objectives related to completing allocations, confirmations, and affirmations as soon as technologically practicable. HSBC will not repaper written agreements but will bolster existing policies and procedures to ensure they include the elements the rule requires. HSBC will advise clients of any procedural changes impacting trade settlement activities with regard to counterparties.

Please read our Frequently Asked Questions below for more detail. You will also find useful guidance on the SEC, the CCMA, AMIB, CCV and DTCC websites.

For more information on the impact of T+1 on the affirmation process, please visit our dedicated T+1 Custody page.

Frequently Asked Questions

Find out more about T+1

Need help?

For more information, please contact your HSBC representative.