JSE Moves to Final T+3 Phase

JSE's trades currently settle on a T+5 basis, or five days after trade date. By contrast, the US settles on T+3, while Europe recently moved to T+2.

The JSE plan for the shortened settlement cycle works in three parts. The first was establishing a series of technical standards that would enable the move, while the second involved setting up a new equities clearing entity, ECSS, or the equities clearing system, along with system changes at the JSE.

"Shortening the current equities settlement cycle will reduce settlement risk while bringing the JSE in line with global best practice," says Leila Fourie, director of post-trade services and information services at the JSE. "Apart from mitigating both systemic and settlement risk, the move to T+3 has numerous benefits for the market including attracting foreign investors by harmonising settlement with international standards and boosting liquidity as assets are released from the settlement process quicker."

The JSE did not give a solid time for the start of the third and final phase, but said that it wouldbe announced in due course.