02nd February 2016
The ASX and NZX have announced the regulatory transition to a T+2 Settlement Cycle on 7 March, 2016
In a campaign to advance market efficiency and align the Australian and New Zealand Stock Exchanges to global best practice, the ASX and NZX have announced the regulatory transition to a T+2 Settlement Cycle on 7 March, 2016.
In the current market, standard settlement occurs 3 businessdays after trade takes place (T+3).
What is changing?
This transition will impact all financial products traded on securities and debt markets. This includes all listed assets (inclusive of: shares, units, bonds, hybrids, CDI’s, warrants and instalments) and fixed income products. All NZX markets are changing (Main Board, Debt, Alternative, NXT and Fonterra Shareholders markets)
- Both the ASX and NZX will adjust the ex-period for Corporate Actions from 3 days to 2 business days.
- This change aligns with the usual settlement period for FX transactions
- The move to a T+2 settlement cycle will require that trade funds and securities are available for settlement 1 day earlier (Trade date, plus two business days).
Why are the ASX & NZX implementing this change?
The transition to a T+2 Settlement cycle will keep Australia & NZ aligned with leading settlement practices around the world, including Hong Kong and Europe, where many countries adopted T+2 Settlement in October 2014. The US is planning to move to T+2 by the end of Q3, 2017.
Moving to a T+2 settlement cycle will:
- Generate capital and margin efficiencies
- Enable clients to have faster access to their funds upon the sale of shares
- Lower systemic risk for the market as a whole
How does this affect me?
While your funds for sell transactions will be with you one day earlier, payments for buy transactions will need to be made one day earlier than currently. To avoid late settlement fees and debit interest, speak with your JBWere representative to take advantage of JBWere services such as:
- A JBWere Nominees Custody account (e.g. Premium) which includes interest-bearing call accounts from which your trades are funded automatically
- Electronic Contract Notes, emailed to you as soon as your trade is completed and confirmed
- Direct Credit to JBWere, rather than posting a cheque