May 28, 2024

Hurray for T+1!

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 because of market volatility, which should allow for lower trading fees.

“A longer settlement period may have a particularly adverse effect in times of a steep market decline,” reads an excerpt from a 23-year-old Canadian Capital Markets Association report that advocated for a T+1 regime to be adopted. “Indeed, the earlier shortening of the settlement period from T+5 to T+3 was in part a response to the 1987 market decline.”

It’s about time. I’ve wanted T+1 for about 25 years now, but I suppose we had to wait for all the old guys who ran the settlements industry to die and make way for people more familiar with these new-fangled computer thingamajigs. And I love the way the article talks about the “complex undertaking” of settlements … it amazes me that an industry that routinely tells clients we can forecast the future has taken so long to modernize.

Oh, and I’ve just remembered an anecdote … back in the ’90’s I got a call from the (very big) trust company that had custody of one of the firm’s clients. They wanted us to try sending them a text file with settlement details rather than a fax, since they would then be able to save time getting the instructions into their system. The best part was that it wouldn’t cost us anything! The additional fee for electronic processing would be paid by the client – not real money at all!

The sales rep on the ‘phone was completely baffled as to why I would turn down the opportunity to reduce our processing time when it wouldn’t cost us anything.

An additional fee for electronic processing. That’s the Canadian financial industry for you! I won’t hold my breath waiting for the “lower trading fees” promised by the Globe’s article to trickle down to the client level any time soon.

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 -0.3252 % 2,341.3
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.3252 % 4,490.7
Floater 10.28 % 10.59 % 66,999 9.00 1 -0.3252 % 2,588.0
OpRet 0.00 % 0.00 % 0 0.00 0 0.2182 % 3,450.8
SplitShare 4.87 % 6.63 % 31,175 1.37 8 0.2182 % 4,121.0
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.2182 % 3,215.3
Perpetual-Premium 0.00 % 0.00 % 0 0.00 0 0.0878 % 2,714.1
Perpetual-Discount 6.32 % 6.49 % 53,285 13.18 27 0.0878 % 2,959.6
FixedReset Disc 5.19 % 7.16 % 123,926 11.93 54 0.2284 % 2,605.5
Insurance Straight 6.17 % 6.37 % 59,971 13.30 21 0.2666 % 2,939.1
FloatingReset 8.86 % 9.10 % 26,018 10.20 2 0.7435 % 2,858.6
FixedReset Prem 6.89 % 6.38 % 211,898 3.06 2 0.4521 % 2,544.2
FixedReset Bank Non 0.00 % 0.00 % 0 0.00 0 0.2284 % 2,663.3
FixedReset Ins Non 4.98 % 6.78 % 94,130 13.13 14 0.6742 % 2,853.7
Performance Highlights
Issue Index Change Notes
BN.PR.Z FixedReset Disc -8.73 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 19.35
Evaluated at bid price : 19.35
Bid-YTW : 8.64 %
PWF.PR.S Perpetual-Discount -1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 18.65
Evaluated at bid price : 18.65
Bid-YTW : 6.52 %
FTS.PR.G FixedReset Disc -1.04 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 20.92
Evaluated at bid price : 20.92
Bid-YTW : 7.16 %
FFH.PR.K FixedReset Disc 1.02 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 21.45
Evaluated at bid price : 21.80
Bid-YTW : 7.90 %
BN.PR.T FixedReset Disc 1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 16.75
Evaluated at bid price : 16.75
Bid-YTW : 8.45 %
BN.PF.I FixedReset Disc 1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 22.39
Evaluated at bid price : 22.90
Bid-YTW : 7.90 %
TD.PF.A FixedReset Disc 1.19 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 22.97
Evaluated at bid price : 23.78
Bid-YTW : 6.24 %
MFC.PR.L FixedReset Ins Non 1.20 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 21.58
Evaluated at bid price : 21.92
Bid-YTW : 6.74 %
TD.PF.J FixedReset Disc 1.22 % YTW SCENARIO
Maturity Type : Call
Maturity Date : 2028-04-30
Maturity Price : 25.00
Evaluated at bid price : 24.80
Bid-YTW : 6.15 %
BN.PF.A FixedReset Disc 1.33 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 21.70
Evaluated at bid price : 22.05
Bid-YTW : 7.73 %
NA.PR.E FixedReset Disc 1.53 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 22.81
Evaluated at bid price : 23.90
Bid-YTW : 6.49 %
BMO.PR.T FixedReset Disc 1.59 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 23.38
Evaluated at bid price : 24.35
Bid-YTW : 6.10 %
MFC.PR.K FixedReset Ins Non 1.71 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 22.75
Evaluated at bid price : 23.84
Bid-YTW : 6.33 %
SLF.PR.E Insurance Straight 1.97 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 19.17
Evaluated at bid price : 19.17
Bid-YTW : 5.98 %
GWO.PR.N FixedReset Ins Non 2.28 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 15.24
Evaluated at bid price : 15.24
Bid-YTW : 7.70 %
CU.PR.C FixedReset Disc 2.43 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 21.05
Evaluated at bid price : 21.05
Bid-YTW : 7.11 %
MFC.PR.J FixedReset Ins Non 2.74 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 23.05
Evaluated at bid price : 24.40
Bid-YTW : 6.42 %
BN.PR.X FixedReset Disc 2.79 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 16.95
Evaluated at bid price : 16.95
Bid-YTW : 8.01 %
Volume Highlights
Issue Index Shares
Traded
Notes
BN.PF.G FixedReset Disc 345,537 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 18.50
Evaluated at bid price : 18.50
Bid-YTW : 8.62 %
POW.PR.D Perpetual-Discount 115,063 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 19.85
Evaluated at bid price : 19.85
Bid-YTW : 6.40 %
PWF.PR.K Perpetual-Discount 107,734 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 19.32
Evaluated at bid price : 19.32
Bid-YTW : 6.49 %
CU.PR.I FixedReset Disc 107,100 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2025-12-01
Maturity Price : 25.00
Evaluated at bid price : 24.01
Bid-YTW : 7.32 %
BN.PF.F FixedReset Disc 97,800 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 20.65
Evaluated at bid price : 20.65
Bid-YTW : 8.05 %
BMO.PR.T FixedReset Disc 88,902 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 23.38
Evaluated at bid price : 24.35
Bid-YTW : 6.10 %
There were 33 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
BN.PR.Z FixedReset Disc Quote: 19.35 – 21.70
Spot Rate : 2.3500
Average : 1.6000

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 19.35
Evaluated at bid price : 19.35
Bid-YTW : 8.64 %

BN.PF.J FixedReset Disc Quote: 22.51 – 24.10
Spot Rate : 1.5900
Average : 1.2565

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 22.07
Evaluated at bid price : 22.51
Bid-YTW : 7.56 %

BN.PF.H FixedReset Disc Quote: 23.65 – 24.25
Spot Rate : 0.6000
Average : 0.3883

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 23.24
Evaluated at bid price : 23.65
Bid-YTW : 8.10 %

GWO.PR.I Insurance Straight Quote: 18.30 – 18.77
Spot Rate : 0.4700
Average : 0.3192

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 18.30
Evaluated at bid price : 18.30
Bid-YTW : 6.27 %

TD.PF.D FixedReset Disc Quote: 23.00 – 24.00
Spot Rate : 1.0000
Average : 0.8518

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 22.53
Evaluated at bid price : 23.00
Bid-YTW : 6.84 %

FTS.PR.G FixedReset Disc Quote: 20.92 – 21.45
Spot Rate : 0.5300
Average : 0.3947

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2054-05-28
Maturity Price : 20.92
Evaluated at bid price : 20.92
Bid-YTW : 7.16 %

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