T+1 Program

T+1 settlements reduce the risk associated with security settlement by minimizing both outstanding settlements and their associated replacement costs.  In addition, this change will mitigate operational and systemic risk by reducing exposure between counterparties and central clearinghouses. 

This change will align the North American markets to the Asian markets which have already moved to T+1 settlement cycle.  

Even at T+2, one of the last remaining exposures in the settlement system is time. Time increases the risk that an unpredictable event could significantly affect the transfer of cash or ownership of securities from the point of trade execution through settlement. T+1 will significantly reduce the marginal relief, risk and volatility.

Accelerating the settlement cycle reduces the number of unsettled positions in a member’s portfolio.

• US Securities & Exchange Commission (SEC)
• SIFMA
• DTCC

 A comprehensive Business Requirement gathering exercise was undertaken in 2022 by the CIBC to ensure all Lines of Business (LOBs) had an opportunity to identify areas of change required to meet T+1 timelines. LOBs participated in providing input to the requirements as well as jointly collaborating in operational review sessions. A consolidated Business Requirement Document was created which identified all the people, process, technology and vendor changes required to support T+1.

CIBC technology, operations and vendor partners executed thorough development and testing cycles to implement the changes and enhance any underlying processes. An extensive testing cycle including Unit Testing, System Integration Testing, Regression and User Acceptance Testing was conducted to ensure the new changes worked as expected without impacting any downstream or upstream systems or processes.

CIBC is participating in T+1 Industry Testing in both US and Canada to test the T+1 changes with the following industry partners within USA and Canada to test the end-to-end trade booking, clearing ands settlement process in the new T+1 environment:

USA:

• Depository Trust and Clearing Corporation (DTCC) for Equities and Fixed Income
• National Securities Clearing Corporation (NSCC) for Fixed Income
• Options Clearing Corporation (OCC) for futures and options

Canada:

• The Canadian Depository for Securities (CDS) for Equities and Fixed Income
• FundServ for Mutual Funds
• Canadian Derivatives Clearing Corporation (CDCC) for OTC and Derivatives

All CIBC vendor partners are also participating in the industry testing. A comprehensive Industry Test Strategy and Test Plan has been prepared and socialized with our operations, technology and vendor partners in readiness for Industry Testing.

USA (DTCC/NSCC/FED):

• All Trade Order Entry & Ticketing applications must update (where necessary) their default settlement period to T+1.​
• Affirmation cut-off time is revised from the current 11:00 AM ET on SD-1 to 9:00PM ET on trade date​.
• Authorizations and Exemptions cut-off time is revised from the current 6:30 p.m. ET on SD-1 to 10:45PM ET on trade date​.
• Disaffirmed trades occurring between 9:00PM ET on T to 1:30PM ET on T+1 would result in NSCC generating reversal transaction for same day settlement .​
• Disaffirmations between 1:31 PM ET on T+1 to 5:00 PM ET on T+ 1 would result in NSCC generating reversal transactions for the next settlement day.
• Securities Lending Recall cut off is revised from the current 3:00 PM ET on T+1 to 9:30 PM ET on trade date.
• For Distributions, the ex-date will be record date​.
• For Voluntary Offers, Cover/ Protect period will be the expiration date plus 1 day.

Detailed DTCC/NSCC proposed changes can be found here.

 Canada (CDS/CDCC/FundServ):

• All Trade Order Entry & Ticketing applications must update (where necessary) their default settlement period to T+1.
• Trades will be reported by exchanges to CDS on an hourly basis.​
• Retail ETF Secondary Market is moving to T+1 settlement aligning to other Exchange trades. ​
• For Distribution type Corporate Actions, the ex-date will move to the record date​.
• For Voluntary Offers with Letter of Guarantee (LOG) Corporate Actions, the Cover/Protect period will be the expiration date plus 1 day.
• The exercise and assignment of options will move to T+1 to align with the settlement of the underlying securities.
  • Regulators have not mandated the move of Mutual Funds settlement to T+1 and have left the decision to individual Fund companies. As such, Fundserv will support both T+2 and T+1 settlements for Mutual Funds.
  • CIBC will be moving its proprietary Mutual Funds’ settlement cycle to T+1.

 CDS current and future state document can be found at here.

• All trade instructions must switch to T+1 from May 28^th 2024 onwards
• All trade allocations must be completed by 6:30 PM ET (end of the day on) Trade Date.
  • Clients and custodians using CIBC technology systems (ETM, SS&C Net etc.) for allocations must send allocation files to CIBC systems before 6:30 PM on Trade Date.
  • Clients and custodians providing allocation information via alternate channels (emails, chat etc.) must provide allocation information to CIBC by 6:30 PM ET on Trade Date.
• All trade affirmation and confirmation must be completed by 6:30 PM ET (end of the day on) on Trade Date by Custodians.
• All trade files must be received by CIBC by 6:30 PM on Trade Date.
• Clients should contact the CIBC Securities Lending desk for hard to borrow securities in advance of executing short sales.