AUSTRALIA: ASX Consultation Paper on Implementing a T+2 Settlement Cycle for the Cash Market

Monday June 1 2015

ASX is consulting on the rule changes required to implement a trade date plus two business days (T+2) settlement cycle for cash market trades in Australia in March 2016. This consultation seeks feedback on the proposed rule changes required to implement T+2 and a consequential reduction in the ex-period for corporate actions. Feedback is also sought in relation to the transitional arrangements being put in place to manage implementation of the change from a trade date plus three business day (T+3) settlement cycle which has been in place since 1999.

ASX undertook a comprehensive consultation process on moving from a T+3 to a T+2 settlement regime in the first half of 2014. That consultation sought feedback on the expected benefits, industry-readiness, an achievable timeframe for implementation and the issues that needed to be addressed to facilitate implementation in the near term. ASX has taken into account the feedback received to formulate the approach to implementation set out in this paper.

Based on the feedback received from consultation in 2014, ASX will implement a later daily batch settlement cut-off time and also reduce the ‘ex-period’ for corporate actions by a business day at the same time that the T+2 settlement cycle is implemented. Overall, the feedback from industry also indicated a preference for all cash market products to be moved to the new settlement regime at the same time in March 2016.

ASX has commenced the preparations and development work for the technical changes required to implement T+2, the reduction in the ‘ex-period’ for corporate actions and the later batch settlement cut-off time. ASX has also been working with stakeholders to ensure industry readiness and a smooth transition to a shorter settlement cycle. To that end, ASX has established a Market Implementation Group (MIG), an open forum where all interested stakeholders and industry associations are encouraged to participate. The MIG meets at least quarterly to discuss project progress and any relevant operational and implementation issues. Meetings are held via webinar to allow open access to interstate and overseas stakeholders. ASX has also been holding a number of vendor and participant workshops to review the expected business and operational changes accompanying implementation of T+2.

The Consultation Paper contains information on the following:

• Implementation timing and scope of coverage;
• Overview of key changes to implement T+2;
• Technology changes to be implemented by ASX and transition Management; and
• Draft amendments to ASX rule books to implement T+2.

Click on the link above for further details.