PSE shortens settlement of trades

MANILA, Philippines — The Philippine Stock Exchange Inc. (PSE) will soon roll out a shortened settlement cycle of trades to enhance operations in the market.

The Securities Clearing Corp. of the Philippines (SCCP), a wholly-owned subsidiary of the PSE, announced that starting on Aug. 24, stock market transactions will be settled after two clearing days instead of three clearing days.

This, after the Securities and Exchange Commission (SEC) earlier gave its green light to the SCCP to start implementing the T+2 settlement cycle (trade date plus two days). Currently, the SCCP observes a T+3 settlement cycle (trade date plus three days).

PSE president and CEO Ramon Monzon said the shortened cycle would further improve operations in the local bourse.

“The successful rollout by SCCP of its new clearing and settlement infrastructure five months ago has led to this landmark development for our market. We expect the shortened settlement cycle to enhance operational efficiency and reduce risk,” Monzon said.

The initiative also aligns SCCP’s settlement cycle with financial markets overseas that are already implementing the T+2 settlement cycle, he said.

Trades on Aug. 24 will be settled on Aug. 29, Tuesday because Aug. 28 is a Monday.

“That is the same settlement date for trades completed on Aug. 23, the last trading day under the T+3 cycle,” the PSE said in its notice.

The SEC also approved a two-week transition period where the applicable settlement deadlines are extended by one hour from Aug. 29 to Sept. 11.

“I am optimistic that the compliance rate of clearing members on the delivery of securities and cash obligations will continue to be within the current range,” Monzon said.

He also recognized market participants for their full cooperation and support in the ongoing preparations for the adoption of the T+2 settlement cycle.

All transactions starting Sept. 12 shall be subject to the regular 12 noon settlement deadline. Applicable penalties for late settlement under the SCCP rules shall apply, according to the PSE.

The PSE has been implementing several initiatives to improve operational efficiency and boost trades in the market.