Update: Global trend to shorten settlement cycles continues - Revision

26.08.2016

Note: This Marketflash, originally published on 24 September 2015, updated on 16 December 2015, 3 March 2016 and 20 April 2016, has been further revised to provide updated information for South Africa. The changes have been highlighted.

Over the past several months, a number of global markets have published plans to shorten their settlement cycles to the European settlement cycle standard, the "Trade date + 2 business days" (T+2) model.

The majority of European securities markets migrated to this standard for on-exchange or trading venues’ transactions on 6 October 2014, triggered by initiatives such as the Central Securities Depository Regulation (CSDR) and TARGET2-Securities (T2S) that aim to increase security, stability and efficiency in Europe’s settlement infrastructure.

The following global markets have announced plans to shorten their settlement cycles:

MarketScopeExpected migration timeframe for settlement cycle 
AustraliaMigration to T+2 for fixed income and equities.T+2 in place since 7 March 2016
CanadaTo be determined.To be determined; expected to be in line with the U.S. market (5 September 2017).
JapanMigration to T+2 cross-border transactions for Japanese Government Bonds: to be determined; for domestic settlement, T+1 is planned; for equities: aiming at a T+2 implementation date in line with the U.S. market, but to be confirmed.Cross-border transactions for Japanese Government Bonds: to be determined; for domestic settlement, T+1 is planned to be implemented from Q2 2018; for equities: aiming at a T+2 implementation in line with the U.S. market, but to be confirmed (Q3 2017).
New ZealandMigration to T+2 for equities.T+2 in place since 7 March 2016
South AfricaMigration to T+3 for equities.T+3 in place since 11 July 2016
SingaporeTo be determined.Potentially Q3/Q4 2017 (12-18 months after SGX' PTS Phase 2 project implementation).
U.S.AMigration to T+2 for equities, corporate and municipal bonds and unit investment trust trades. See our marketflash M15004, dated 19 June 2015, and the DTCC webpage for further information.5 September 2017
VietnamMigration to T+2 for on-exchange equities and fund certificates transactions.T+2 in place since 1 January 2016

Based on current information from these markets, no major impacts on Clearstream Banking1 customers are anticipated as a result of these migrations. However, customers are advised to assess the potential implications on timely cash and security provisioning and to note that there may be changes to the Ex-date/ Record date rules for some domestic markets.

Clearstream will communicate any specific changes as soon as information becomes available in the local markets, and will update relevant Creation Link Guides and related information accordingly.

For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.

This Marketflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Marketflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Marketflash does not constitute legal or tax advice.

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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for CBF customers using CreationOnline), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500