JSE implements second phase of T+3

Source: Johannesburg Stock Exchange

The JSE has successfully completed the second phase of the JSE’s number one priority project, the T+3 project. The project is being implemented in three phases, and will result in the local equities market moving from the current T+5 settlement cycle to a shorter, three day settlement cycle (which is the intention of Phase 3 on the initiative).

The JSE’s move to a T+3 settlement cycle will further align the South African market with global best practice and improve its efficiency and credibility.

The first phase of the project was successfully taken live in 2013, and saw the establishment of a series of technical changes which have enabled the effective implementation of the remaining phases.

The successful completion of Phase two of T+3 entailed the implementation of a new clearing system (ECSS – the Equities Clearing System) and substantial changes to existing JSE systems (including the Broker Dealer Accounting (BDA) system) – all with the aim to enable the execution of the forthcoming final phase of the project.

The JSE has undertaken extensive market engagement to ensure that all parties involved in the process are fully engaged and aware of the changes taking place, and the successful Phase 2 implementation is thanks to the collaborative efforts of participants from across the market.

Leila Fourie, Director of Post Trade Services and Information Services at the JSE says, “Shortening the current equities settlement cycle will reduce settlement risk while bringing the JSE in line with global best practice. Apart from mitigating both systemic and settlement risk, the move to T+3 has numerous benefits for the market including attracting foreign investors by harmonising settlement with international standards and boosting liquidity as assets are released from the settlement process quicker.”

The JSE currently has a very strong post-trade base across all markets and its vision is to become a global leader in the post-trade and clearing environment. The transition to T+3 is just one of the many initiatives that will aid the exchange to further entrench these world class standards.

The exchange will commence with the implementation of phase three of the project in due course and will inform all market participants of its plans.

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