Just cut off the unused core. Can't imagine it would need heatshrink if it's cut in the right place but no harm doing so either way.

Didn't twig you were using CY cable already. The main difference seems to be that the braid in SY is for primarily for protection against damage while in CY, it's for EMC screening. So SY seems to be used in machine tools where there is risk of cables being damaged. Must say, I've not used either on my machines - I have Lapp drag cables for the servos on my Bridgeport (power and encoder are separately screened) and steel conduit for the servos (the encoders have their own screened cables) and VFD on my bigger machine.