On Oct. 26, CIRO guidance on forex hedge trade settlement date use.
CIRO issued guidance on regular settlement date use for certain forex hedge trades.
Provided clarity on regular settlement date to be used for certain forex hedge trades when determining settlement date margin requirements for foreign currency trades.
Follows Bulletin 23-0150 approving the trade date plus 2 settlement cycle, #170199.
Replaced guidance GN-4800-21-001 on forex regular settlement dates, see #119044.
For margin purposes, regular settlement date to be used for forex spot trades should be the same regular settlement date as the foreign currency-denominated security.
Where the trade date for the foreign exchange spot trade is the same as the trade date of the foreign currency-denominated security; provided example of settlement dates.
Regular settlement date is T+1, where spot trade hedges forex risk associated with trade in foreign currency-denominated security that has regular T+1 settlement date.
T+2, where forex spot trade hedges the foreign exchange risk associated with a trade in a foreign currency-denominated security that has a regular settlement date of T+2.
Subsequent to regular settlement date, where counterparty to spot trade is acceptable counterparty/regulated entity, trade must be margined on an equity deficiency basis.
Effectiveness
Guidance GN-4800-23-0001, forex hedge fund settlement, takes effect May 27, 2024.
