Monday March 7 2016
News Source: Global Exchanges
Focus: Trading Systems and Technology
Type: General
On 7th March 2016, ASX shortened the settlement cycle to T+2. Reducing the settlement period from a T+3 cycle creates capital and margin savings for industry, and a faster settlement of transactions for investors, meaning they receive their cash or securities sooner. It also lowers systemic risk for the market as a whole by reducing counterparty risk for individual investors, participants and the clearing house. The move to T+2 keeps Australia aligned with global best practice.
The adoption of T+2 settlement is the culmination of an extensive two-year consultation and testing program led by ASX and strongly supported by Australia’s securities industry. There was 100% attestation of T+2 readiness from the more than 100 directly relevant market participants, including brokers, clearers, system vendors and market operators. There was also endorsement from the Business Committee, comprising industry representatives under ASX’s Code of Practice for the clearing and settlement of cash equities in Australia.
T+2 settlement already operates in a number of major markets, including Europe and Hong Kong. The United States and Canada have proposed moving to T+2 in September 2017.
Additionally, the Australian Financial Markets Association (AFMA) also moved to T+2 settlement for Australian fixed income products on 7 March 2016, creating consistency between the cash and debt markets.
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