State Street Global Advisors (SSGA) has sped up settlement times for 42 ETFs ahead of the US’s move to a T+1 cycle. These ETFs, heavily invested in US, Canadian, and Mexican equities, will now settle creations and redemptions within one day.

This change is happening as the US, Canada and Mexico switch from T+2 to T+1 later this month, which is expected to have a big impact on the European ETF market, reports ETF Stream.

Popular ETFs like SPDR S&P 500 UCITS ETF (SPY5) and SPDR S&P U.S. Dividend Aristocrat UCITS ETF (USDV) will be affected, along with global ETFs like SPDR MSCI World UCITS ETF (SWRD). As Europe is still on T+2, asset managers are hurrying to adapt, worried that ETFs might breach UCITS funding rules, including cash and overdraft levels.


T+1 concerns

Despite industry calls for changes due to T+1 concerns, the European Securities and Markets Authority (ESMA) has decided not to alter UCITS rules, stating that there are no EU legal barriers preventing UCITS from adjusting to the US’s T+1 cycle. This decision comes after industry requests for a temporary halt to the Central Securities Depository Regulation (CSDR) to lessen settlement risks.

Last October, ESMA began discussions on shortening settlement cycles across equities, fixed income, and ETFs in Europe, with the UK expressing interest in aligning its cycle with the EU.