Bursa Malaysia eyes shorter securities settlement

PETALING JAYA: Bursa Malaysia Bhd aims to shorten the securities settlement cycle to two days (T+2) from the three-day cycle (T+3) by the second quarter of 2019.

The stock exchange said in a statement that it has issued a consultation paper seeking public feedback on the proposed move for a shorter securities settlement cycle.

The proposal is part of ongoing efforts at improving operational efficiency, reducing systemic risks and aligning the clearing and settlement processes of the Malaysian capital market with international practices.

Bursa said the review of the settlement cycle was initiated to keep pace with changing trends of the market and the needs of market participants and investors.

It said among the benefits of the proposed two-day settlement cycle included, improved operational efficiency, reduced counterparty settlement risk, as well as strengthening marketplace competitiveness through harmonisation of post-trade infrastructure with major global exchanges.

The proposed key changes include: amendments to the cut-off times relating to tradeable balance in securities account, the delivery and settlement between a broker and its clients, and between the broker with Bursa Securities and amendments to the applicable timing with respect to buying-in, cash settlement, selling out and discretionary financing.

The public are invited to submit their comments and feedback to Bursa Malaysia by Dec 28.