CSA introduces new rules for faster mutual fund settlements

Regulators prepare for T + 1 settlement transition
CSA introduces new rules for faster mutual fund settlements

In response to the recent shift by North American securities markets to a T+1 settlement cycle, the Canadian Securities Administrators (CSA) have published final amendments to aid mutual funds that opt to shorten their trade settlement cycles from two trading days to one (T+1).

These amendments accommodate various settlement cycles for mutual funds, including those adopting T+1. The changes include clarifying payment dates for transactions and adjusting the timeframe for forced redemption of securities due to non-payment.

For funds transitioning to T+1, the period for forced redemption of securities for non-payment is reduced from three days to two days after the pricing date.

The detailed CSA Notice on Amendments to National Instrument 81-102 Investment Funds and changes to its Companion Policy 81-102CP can be found on the websites of CSA members.