CSA Staff Notice 24-319 Regarding National Instrument 24-101 Institutional Trade Matching and Settlement – Update and Staff Recommendation

CSA STAFF NOTICE 24-319 REGARDING NATIONAL INSTRUMENT 24-101 INSTITUTIONAL TRADE MATCHING AND SETTLEMENT -- UPDATE AND STAFF RECOMMENDATION

August 10, 2023

Introduction

On December 15, 2022, the Canadian Securities Administrators (CSA) published for comment proposed amendments (the 2022 Proposed Amendments) to National Instrument 24-101 Institutional Trade Matching and Settlement (NI 24-101). This Notice contains CSA Staff's (Staff or we) views regarding changes to the 2022 Proposed Amendments based on industry feedback. Staff intend to recommend that our respective decision-makers adopt{1} a revised version of the 2022 Proposed Amendments that would include a trade-matching deadline of 3:59 a.m. Eastern Time on the day after the trade (T+1) (rather than a trade-matching deadline of 9 p.m. Eastern Time on the date a trade is made as was published in the 2022 Proposed Amendments).

Background

NI 24-101 provides a framework for ensuring efficient and timely settlement of the processing of institutional trades (equity and debt) by registered dealers and advisers (Registered Firms). NI 24-101 has a number of requirements including that Registered Firms are required to establish, maintain and enforce policies and procedures designed to achieve the matching threshold of institutional trades.

The 2022 Proposed Amendments are intended to align with the shortening of the standard settlement cycle for equity and long-term debt market trades in Canada from two days after the date of a trade (T+2) to T +1, and to coincide, as much as possible, with parallel changes in the United States.

The Notice that accompanied the 2022 Proposed Amendments asked for feedback on the most appropriate trade-matching deadline to achieve settlement on T+1.{2}

Purpose of this Notice

In public comments on the 2022 Proposed Amendments, we received feedback indicating that participants favored a trade matching deadline of 3:59 a.m. on T+1. Staff are supportive of this change to the 2022 Proposed Amendments.

In other, more recent communications, the Canadian Capital Markets Association (CCMA), which is leading industry coordination efforts in Canada, expressed concerns about the trade-matching deadline published in the 2022 Proposed Amendments and the need to know the trade-matching deadline as soon as possible in order to make the necessary preparations, including information technology systems changes and testing, for the T+1 transition.

In response to this feedback, Staff are publishing this Notice to update industry about our recommendation regarding the trade matching deadline to help firms with their preparations for the transition to T+1. The amendments recommended by Staff, if approved by our respective decision-makers,{3} are expected to come into force on a date that is aligned with Canada's industry move to a T+1 settlement cycle, currently expected to be May 27, 2024.

Questions

If you have questions, please contact any of the following:

Ontario Securities Commission Aaron Ferguson Manager, Market Regulation Tel: 416-593-3676 Email: [email protected]   Ontario Securities Commission Jarrod Smith Senior Accountant, Market Regulation Tel: 416-263-3778 Email: [email protected]   Ontario Securities Commission Stephanie Wakefield Senior Legal Counsel, Market Regulation Tel: 647-401-8397 Email: [email protected]   Autorité des marchés financiers Dominique Martin, Senior Director, Market Activities and Derivatives Tel: 514-395-0337, ext. 4351 Email: [email protected]   Autorité des marchés financiers Yasmine Garreau Senior Policy Advisor - Oversight of Clearing Activities Tel: 514-395-0337, ext. 4697 Email: [email protected]   Autorité des marchés financiers Francis Coche Analyst, Derivatives - Oversight of Clearing Activities Tel: 514-395-0337, ext. 4343 Email: [email protected]   Financial and Consumer Services Commission (New Brunswick) Amelie McDonald Legal Counsel Tel: 506-635-2938 Email: [email protected]

Alberta Securities Commission Harvey Steblyk Senior Legal Counsel, Market Regulation Tel: 403-297-2468 Email: [email protected]   British Columbia Securities Commission Michael Grecoff Securities Market Specialist, Capital Markets Regulation Tel: 604-899-6864 Email: [email protected]   British Columbia Securities Commission Navdeep Gill Senior Legal Counsel, Legal Services, Capital Markets Regulation Tel: 604-899-6970 Email: [email protected]   Manitoba Securities Commission Paula White Deputy Director, Compliance and Oversight Tel: 204-945-5195 Email: [email protected]   Financial and Consumer Affairs Authority of Saskatchewan Liz Kutarna Director, Capital Markets, Securities Division Tel: 306-787-5871 Email: [email protected]   Nova Scotia Securities Commission Chris Pottie Deputy Director, Registration & Compliance Tel: 902-424-5393 Email: [email protected]

{1}Subject to applicable ministerial approvals.

{2}https://www.osc.ca/en/securities-law/instruments-rules-policies/2/24-101/csa-notice-and-request-comment-proposed-amendments-national-instrument-24-101-institutional-trade

{3}Subject to applicable ministerial approvals.