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T+2 sweeps the globe
and becomes the stan-
dard in major markets,
East Asia remains a laggard and
counterintuitive patchwork in the
leap towards shorter settlement
cycles. It’s of little surprise that the
Stock Exchange of Hong Kong and
the Korea Exchange are already
there, but the Singapore Exchange
(SGX) and the Tokyo Stock
Exchange (TSE), major region-
al, if not global, leaders, are not.
Most odd is the fact that the Stock
Exchange of Thailand (SET) made
the move in March 2018, ahead
of players usually considered far
more advanced.
“The T+2 project has been on our
minds, and we have been working
on it for 18 months,” says Patara-
vasee Suvarnsorn, executive vice
president of the Stock Exchange of
Thailand and managing director
Thailand Clearing House. “We
think it is time.”
Hong Kong Exchanges and
Clearing Limited (HKEx) made the
switch with little fanfare in 2011.
With the exception of small bro-
kers, who favoured the existing system and viewed the
shorter cycle as putting them at a competitive disad-
vantage, the move was widely supported. The Korean
Exchange (KRX) has been T+2 since at least 2000, and
for a time it considered taking the cycle down to T+1.
The Bombay Stock Exchange (BSE) and Taiwan
Stock Exchange (TWSE) made the shift to T+2 in 2003
and 2009 respectively.
Patchwork approach
Globally, the push towards shorter settlement cycles
gained momentum after the 2008 financial crisis, with
Europe going first, followed by the US last year. In
contrast, Asia’s experience has been far less coordinat-
ed which, in part, is a function of the region’s diversity.
Asian markets range from the Yangon Stock Ex-
change (YSE), with five listings, and the Lao Securities
Exchange (LSX), with six, to the TSE, with 2,600 in
the First Section alone. In between are markets at
varying degrees of development in terms of systems,
infrastructure and investor profile.
Even within the Association of Southeast Asian
Nations (ASEAN) pushing for market harmonisation
and eventual seamless regional trading, no consensus
exists on post-trade architecture. The markets can at
times be more competitive than cooperative, while
some are held back by domestic legal systems and the
interests of their local brokerages.
At least two exchanges in the region considered
going to T+2 in the past but abandoned the efforts.
“T+2 has been in the works
for some time. It is all
part of our post-trade
modernisation programme,
basically aligning
ourselves with industry
best practices.”
NICO TORCHETTI, SENIOR VICE PRESIDENT,
HEAD OF MARKET SERVICES, SGX
70 // TheTrade // Spring 2018