Investors might never notice, but the way Canadian capital markets function fundamentally changed this week after a process that began nearly 30 years ago was finally completed.
Settlements, the complex undertaking that ensures money and securities properly change hands every time stocks or bonds are bought or sold, previously had to be completed within two business days of the trade itself. As of Monday, however, settlements now have a single business day to be completed.
While the shift from what was known as T+2 to the new T+1 regime might seem insignificant or even irrelevant for retail investors, experts argue the opposite is true. Sale proceeds will hit investment accounts faster as trades start settling more quickly and interest charges on any money borrowed to buy securities will kick in one business day earlier than before.
Ultimately, the move to T+1 will increase market efficiency and lower risks of trades failing to settle…
