Iran adopts T+2 settlement cycle

Source: Central Securities Depository of Iran

Effective February 6, 2018, the standard settlement cycle for brokerage transactions including stocks at Central Securities Depository of Iran (CSDI) was reduced from trade date plus 3 business days (“T+3”) to trade date plus 2 business days (“T+2”).

President and CEO of Central Securities Depository of Iran, Mr. HosseinFahimi, said, “T+2 settlement will reduce operational and systemic risks between each party and improve capital and efficiency in the financial system.”

Mr. Fahimi went on to say, “With the large daily volume of trading in the market, the change from T+3 to T+2 decreases risk in our financial systems and directly benefits investors and other market participants.”

The CSDI President meanwhile acknowledged that Central Securities Depository of Iran (CSDI) now plans to design and fully implement Delivery-versus-Payment system (DvP) standardsettlement services as well as Central Counter-Party (CCP) in a very near future.

CSDI is currently operating under a settlement policy which is very similar to DvP2. However Iran’s Depository seeks to optimize the existing settlement to access standard DVP instructions for all its settlements standards and procedures.

The core focus at CSDI is to provide protection to both sides of a trade so that each party makes sure the trade will settle at the agreed price even in the event one party defaults on its obligations through Investor Protection Funds, credit limits and custodians. The CCP, too, will strengthen this aspect as it interposes itself as counterparty to both parties involved in a trade.
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