Dear Valued Advisor,
We are sharing important industry news in this communication and we encourage advisors to address all aspects of their clients’ needs and introduce investments as one of the many ways advisors help clients grow their wealth and protect their families.
What do Advisors Need to Know?
Effective May 27, 2024, Canadian Securities Market will move from the current T+2 settlement cycle to T+1 settlement cycle (one day following the trade date). For the most part of this change, it is business as usual. However, below are business requirements to achieve T+1 with your investment transactions.
T+1 means segregated fund investment (funds) transactions are settled one business day after the transaction date or the date when the trade executed.
Most funds will move to T+1 settlement for all partner insurance companies. The list of funds delayed moving to T+1 varies by insurance company.
Why is the industry moving to T+1?
The Canadian Securities Market is changing to T+1 settlement in order to align with North American markets. This change will benefit you and your clients by:
- Improving market liquidity and reducing risk;
- Providing faster access to funding;
- Lowering margin requirements;
- Enhancing operational efficiency through more automation and straight-through processing to meet the T+1 settlement timeline; and
- Aligning with U.S. markets to reduce market inefficiencies.
How might T+1 Change impact advisors?
The reduced trade processing time from two days (T+2) to one day (T+1), means investment applications and payment methods for deposits and redemptions must be ‘in good order’ (IGO) to avoid delays. Use of electronic tools to meet T+1 settlement is mandatory to achieve T+1 settlement. Without use of the electronic tools listed below, fund transactions cannot meet T+1 settlement requirements. Cancelled Transactions will incur dilution of fund charges*, which are payable by the advisor.
Electronic tools such as secure email, e-applications, carrier’s websites (portals), and use of One Time PAC/PAD offer different ways to facilitate T+1 trade settlements, such as:- Use of One Time PAC/PAD authorization is mandatory to achieve T+1, rather than use of cheques. Provide the following documentation:
- Carrier’s current dated Preauthorized Debit Agreement (PAD) authorization, and
- VOID cheque (name & address must match carrier’s records), or
- Bank’s Direct Deposit or PAD form (name & address must match carrier’s records).
- For privacy reasons, always send client’s confidential information via VirtGate Secure email to investments @globalpacific.com;
- Where e-applications are utilized, processing trades becomes automated, minimizing errors and delays;
- Advisors can utilize carrier’s portals to coordinate additional deposits, redemptions, change banking, as well as other transactions;
- Global will utilize FundServ EFT settlement for additional deposits and redemptions when the documentation provided allows for this method; and
- As a reminder, Global’s investment transaction cut off time is 9:30 am, utilizing the Investment email inbox.
IMPORTANT NOTE: Where client’s cheques are utilized rather than One-Time PAD authorizations, business will be couriered to the carriers for manual processing. The financial industry at large is discouraging hardcopy transactions so that guaranteed transaction dates can occur for your client.
Delayed Processing/Delay in Processing means the transaction did not process and advisor action is required. Global, or the insurance company, will contact the advisor for Urgent Action Required. These are common causes for a delay:
- Incorrect Fund code selection – Before submitting transactions, be sure to choose the intended funds accurately on all documents. Check the available list of funds to be certain the fund selected is still offered &/or open to additional deposits &/or switches;
- Incomplete or Incorrect Banking details; and
- Missing Limited Trade Authorization (LTA) – provide your file copy of the LTA with each transaction.
A cancelled transaction means a fund purchase or redemption was made by the insurance company and the trade was cancelled for requirement(s) not being met. Where funds to settle a purchase or redemption are not received prior to the T+1 settlement, the insurance company’s systems will auto-cancel the transaction. Where this occurs, the advisor is responsible for any dilutions incurred meaning charges* assessed by the insurance company.
*Charges
1. Where charges are assessed by an insurance company for dilution of funds, the Advisor is solely responsible for payment to the insurance company or repayment to Global (the dealer) for reimbursement to the insurance company.
2. Where cheques are received at Global, resulting in the requirement (for Global) to courier applications &/or deposits to the carrier, the advisor will be assessed service charges for Outlays and Disbursements incurred by Global to deliver cheques.
Refer to Global’s Investment Trade Guidelines email for 2021. Click here.
If you have any questions, please contact your Sales support team at Global Pacific.
We thank you for your continued business.
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