Bursa Malaysia seeks feedback on shortening securities settlement

KU ALA LUMP UR: Bursa Malaysia Bhd has issued a consultation paper seeking public feedback on its proposed move to introduce a shorter securities settlement cycle of two days (T+2) from the current cycle of three-days (T+3).

The changes are expected to be introduced by the second quarter of 2019.

The proposal was part of its ongoing efforts at improving operational efficiency, reduced systemic risks and aligning the clearing and settlement processes of the Malaysian capital market with international practices.

“The review to migrate from aT +3 to T +2 settlement cycle was initiated to keep pace with changing trends of the market and

The review to migrate from a T+3 to T+2 settlement cycle was initiated to keep pace with changing trends of the market and needs of market participants and investors. Source

needs of market participants and investors,” the local bourse said in a statement yesterday.

The benefits of the proposed T+2 settlement cycle would, among others, include improved operational efficiency, where the shorter settlement period would avail securities and funds earlier to investors, reduce counterparty settlement risk as a result of the shorter exposure to unsettled trades.

Another benefit was to strengthen the competitiveness in the marketplace through the harmonisation of post-trade infrastructure with major global exchanges in the United States, Europe and Asia-Pacific which already operated a T+2 settlement cycle.

In this regard, the rules of Bursa Malaysia Securities Bhd and that of Bursa Malaysia Securities Clearing Sdn Bhd would be amended to facilitate the move from a T+3 to a T+2 settlement cycle.