Positions traded on or after the T+1 cycle go-live date
The new T+1 standard will apply to new listed and Over-The-Counter (OTC) Transactions traded from 27 May 2024 in Canada and Mexico and 28 May 2024 in the US, where the underlying is in an in-scope market and product. This will apply to physical settlements, effective dates and schedules.
Positions traded before the T+1 cycle go-live date
Any OTC contract entered into before 27 May 2024 in Canada and Mexico and 28 May 2024 in the US will remain on a T+2 settlement cycle until one of the following occurs:
- A roll of the position into a new contract. Once rolled, the new contract will be confirmed on a T+1 basis (this will impact physical settlements, effective dates and schedules)
- A client request is received to change terms of the contract. For bespoke client requests, HSBC will support you in managing the transition to T+1 through careful planning and execution. To request a renegotiation of contract terms from T+2 to T+1, please contact your usual HSBC representative.
- A termination or unwind of the position. Terminations and full or partial unwinds will be determined on a product by product basis and should be agreed with your usual HSBC representative.
Note that regulatory identifiers such as OTC ISIN, UPI or UTI should be unaffected.
What are the expectations for the timing and settlement of resets on existing contracts?
For TRS / Portfolio Swaps that reference single stock equities, any resets on or after the implementation date will be updated to settle on T+1 in line with the underlying market settlement cycle.
- Accrual start date will change from T+2 to T+1
- Reset period payment delays will change from T+2 to T+1
- Lookback for the financing benchmark rate will remain as 2 days. Any changes would be considered bespoke
For TRS that reference Index underliers, no changes are expected to be made to the swap schedule.
Note that regulatory identifiers such as OTC ISIN, UPI or UTI should be unaffected.
