SGX consults on pre-settlement matching service

Source: Singapore Exchange

Singapore Exchange ("SGX") is inviting public comment on the rule amendments to introduce the Pre-Settlement Matching Service ("PSMS"), which will automate the matching of settlement instructions of trades among Clearing Members and Depository Agents ("DAs").

The proposed PSMS is part of SGX Prime, an open access infrastructure that facilitates straight-through processing of trades for the securities market via the Exchange's clearing and settlement system. The automated PSMS will enhance market participants' operational efficiency and minimise errors by replacing the manual affirmation of settlement instructions.

To facilitate the introduction of PSMS, the Exchange is proposing the following key amendments to its settlement frameworks:-

(1) To streamline Delivery-versus-Payment ("DVP") transactions such that DAs are able to send settlement instructions without having to differentiate between on-exchange trades, turnaround trades or off-market transfers.

Streamlining settlement instructions and including off-market transfers in the DVP settlement process will improve the overall efficiency of the system and reduce operational risks for DVP participants.

(2) To credit purchased securities for all Free-of-Payment ("FOP") and CPF transactions respectively to the "Free" instead of "Available" balance of DAs' sub-accounts and the CPF omnibus sub-accounts.

This will allow the adoption of standard industry message protocols and facilitate the open access capability. Clearing and settlement of exchange trades through the CDP under Inter-Broker Settlement remains unchanged.

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