In a letter to financial institutions, the Office of the Superintendent of Financial Institutions indicates that it may implement requirements forcing firms to report their progress toward achieving readiness for T+1 settlement periods. It notes that provincial securities regulators may be doing this, too.

OSFI says that experts have indicated that, for many organizations, the effort required to move to T+1 may be far greater than that involved in getting ready for Y2K. Apart from making extensive systems changes, institutions may also have to revise the manner in which they do business.

OSFI is participating as an observer in the Canadian Capital Markets Association, which is coordinating the move to T+1. It says that the transition to T+1 would ideally happen simultaneously, “in order to minimize the potential for failed trades and other disruptions”.

It says, “CEOs and other individuals responsible for setting strategic and business objectives are requested to ensure that the implications of T+1 are taken into account in the planning process, not only by the ‘back-office’ and systems groups, but by all business areas, including client service and relationship management functions.”

In a letter to all registrants, OSFI notes that provincial securities regulators recently indicated that they are considering introducing new rules, such as reporting requirements, to monitor the progress of efforts to prepare for T+1.

OSFI indicates it will also be considering including inquiries into T+1 preparations as part of its 2002/2003 supervisory process, once the CCMA has outlined the key steps and guidance for moving to the new settlement time frame in June 2004.