Accommodating a voluntary T+1 settlement cycle
Changes to settlement cycles affect how mutual funds operate, how trades are processed, and how efficiently investors receive proceeds.
Submission to CSA – Re: Proposed Amendments to Accommodate a T+1 Settlement Cycle
Recipients
- Canadian Securities Administrators (CSA)
- Alberta Securities Commission
- Autorité des marchés financiers
- British Columbia Securities Commission
- Financial and Consumer Services Commission (New Brunswick)
- Financial and Consumer Affairs Authority of Saskatchewan
- Manitoba Securities Commission
- Nova Scotia Securities Commission
- Nunavut Securities Office
- Office of the Superintendent of Securities (Newfoundland and Labrador)
- Office of the Superintendent of Securities (Northwest Territories)
- Office of the Yukon Superintendent of Securities
- Ontario Securities Commission
- Superintendent of Securities, Department of Justice and Public Safety (Prince Edward Island)
Industry segments this resource supports
- Assets management
Summary
Our submission responds to the CSA’s proposed amendments to National Instrument 81-102 to accommodate a voluntary move by mutual funds to a T+1 settlement cycle. We support the CSA’s flexible approach, which allows each mutual fund to determine whether T+1 is operationally feasible. We agree that technical amendments to NI 81-102 are necessary to support funds that choose to adopt T+1 and recommend adding guidance to the companion policy to clarify what constitutes acceptable “in writing” disclosure of a fund’s settlement cycle. We propose that disclosure through Fundserv files or a fund’s designated website should satisfy the requirement.
Why this matters: This submission matters because changes to settlement cycles affect how mutual funds operate, how trades are processed, and how efficiently investors receive proceeds.
Key takeaways
- IFIC supports the CSA’s decision not to mandate a T+1 settlement cycle for primary mutual fund distributions and redemptions.
- A flexible, voluntary approach allows each mutual fund to assess whether T+1 is appropriate based on its operational realities.
- IFIC agrees that technical amendments to NI 81-102 are needed to ensure mutual funds can redeem securities promptly when purchasers fail to pay under a T+1 cycle.
- IFIC recommends adding guidance to 81-102CP to clarify what qualifies as “in writing” for disclosing a fund’s settlement cycle.
- Acceptable disclosure methods should include Fundserv files and a fund’s designated website, providing operational efficiency and alignment with recent regulatory burden reduction initiatives.
- IFIC cautions against prescriptive guidance that limits how funds may meet the disclosure requirement.
The submission concludes with an offer to provide further information or answer questions.
