Tuesday February 25 2014
News Source: Global Exchanges
Focus: Stock Exchange Regulation
Type: General
Country: Australia
Link: http://www.asx.com.au/documents/asx-news/ASX_T_2_Consultation_Media_Release.pdf
ASX is consulting on the introduction of a T+2 settlement cycle for cash market trades in Australia. The proposal would shorten the current settlement period of trade-day-plus-three-days (T+3) by one business day, creating capital and margin savings for industry, and a faster settlement of transactions for investors.
ASX is seeking feedback on the benefits, industry readiness, timetable for implementation and other issues that would need to be addressed to enable the transition to T+2. T+2 already operates in a number of major markets, including Germany and Hong Kong, and will shortly be introduced throughout Europe.
The potential benefits of shortening the settlement cycle by one business day include:
• reduced counterparty risk for individual investors, participants and the central counterparty (clearing house), resulting in lower systemic risk for the market as a whole
• less regulatory capital required to be held by market participants to mitigate risk
• standardised regional and global settlement practices
• improved post-trade operational and process efficiencies, and associated cost savings.
Click on the above link for further details.