Shorter Settlement for JSE

On Monday, July 11^th, the Johannesburg Stock Exchange (JSE) formally completed its move to a shorter settlement cycle in which all trades conducted on the exchange will now be settled on a T+3 cycle. This is one of the ways in which the exchange is staying at the “forefront of global best practices,” the JSE Group, the parent company, said in a statement.

The project was implemented and rolled out in three consecutive phases and took three years to reach its final implementation stage. According to the exchange, it has been one of the most ambitious initiatives undertaken by JSE Group and will effectively “bolster the credibility of South Africa as an investment destination”. One of the main benefits of the shorter settlement cycle is that the number of unsettled trades will now be nearly halved, which JSE Group has confirmed. In addition to lower settlement risk, the new shorter cycle will release funds two days earlier–therefore increasing the circulation of available funds in the market.

“This is a major milestone for our country and our capital markets. The alignment with global standards will increase interest from global investors who constitute more than a third of our equity market volumes,” Dr. Leila Fourie, executive director at the JSE said. “Coupled with this, the move to a shorter T+3 settlement cycle will significantly reduce the number of unsettled trades at any given point, substantially reducing the potential risks and losses between trading parties and enhancing investor protection.”

System changes for the T+3 project were deployed during the weekend of July 9-10th and JSE Group formally announced that the deployment efforts by the JSE and all market participants over this weekend were successful. “Extensive integration testing has taken place between the JSE, Strate and the CSDPs, and the positive results achieved signify implementation success”, the Group stated.

Having successfully closed out on all of the deployment and testing criteria, JSE has confirmed that the equities market has now fully moved to a T+3 settlement cycle.