Vanguard UCITS ETFs move to T+2 settlement

Sep 4th, 2017 | By | Category: ETF and Index News

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Vanguard has announced that, as of 5 September 2017, it plans to shorten the settlement cycle process for its UCITS-compliant ETFs sold on the secondary market from three business days after the trade date (T+3) to two business days after the trade date (T+2).

Vanguard UCITS ETFs move to T+2 settlement

As of 5 September 2017, most of Vanguard’s range of UCITS ETFs will move to T+2 settlement.

The move, which reflects changes being introduced to the whole US financial industry on the same day, aligns the settlement time of the ETFs with the settlement time of the underlying investments on the key markets on which they trade.

According to Vanguard, the change is designed to reduce a number of risks, including credit risk, market risk, liquidity risk and, as a result, systemic risk. It will also introduce greater global settlement harmonisation, as many countries have also recently moved their settlement cycles to T+2.

ETFs affected by the change are outlined below:

Vanguard FTSE All-World High Dividend Yield UCITS ETF
Vanguard FTSE All-World UCITS ETF
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF
Vanguard S&P 500 UCITS ETF
Vanguard FTSE Developed World UCITS ETF
Vanguard FTSE North America UCITS ETF
Vanguard Global Momentum Factor UCITS ETF
Vanguard Global Liquidity Factor UCITS ETF
Vanguard Global Value Factor UCITS ETF
Vanguard Global Minimum Volatility UCITS ETF
Vanguard FTSE Emerging Markets UCITS ETF

At the same time, Vanguard has announced that primary-market transactions in the above ETFs will also move to T+2. (Primary-market transactions are where authorised participants create new shares in ETFs to meet the needs of large investors.)

From 5 September, authorised participants in these funds will need to provide payment within two days of instructing the trade. However, since most clients deal for ETFs on the secondary market (i.e. via an exchange) and these ETFs are only listed on European exchanges, they are already following a T+2 cycle.

Primary market transactions in the Vanguard FTSE Japan UCITS ETF will remain at T+3.

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