The Securities Clearing Corporation of the Philippines (SCCP), a wholly-owned subsidiary of the Philippine Stock Exchange Inc. (PSE), has migrated to a shortened settlement cycle of 2 days of clearing after the transaction (T+2).
This migration is a significant advancement in the domestic capital market and will align the Philippines with major international markets such as the United States, most European Union member states and the major markets in the Asia-Pacific region, the PSE said.
“We are pleased with the smooth transition to the shortened settlement cycle. We are grateful to all market participants for supporting this initiative,” said PSE President and CEO Ramon S. Monzon, who also serves as president and CEO of SCCP.
Preparations for the T+2 migration commenced immediately after the March 27 implementation of SCCP’s new clearing and settlement system, which is capable of accommodating any settlement cycle.
Market participants, including stockbrokers, custodian banks, the Philippine Depository and Trust Corp., stock transfer agents, PSE’s issuer regulation division and the Capital Markets Integrity Corp. all took part in working group discussions, readiness activities and testing sessions over a 5-month period, to ensure that the market was ready for a T+2 settlement cycle.
On August 10, the SCCP received the approval of the Securities and Exchange Commission for its request to migrate to the T+2 settlement cycle on August 24.
The PSE said the launch of the shortened T+2 settlement cycle will reduce various risks of unsettled trades under a T+3 regime and will promote more efficiencies in Philippine capital market.
“Aside from aligning the settlement cycle with major international markets, we expect that market participants will soon experience the benefits of operating in a T+2 environment,” Monzon said.
On August 29, the SCCP settled two batches of trades where the first batch comprised of the last T+3 trades executed on August 23 and the second batch comprised of the first T+2 trades which were executed on August 24. All transactions were settled before their respective settlement deadlines.
Subsequent settlements until September 4 were done before 1pm, the extended settlement deadline that is in effect until September 11. Starting September 12, the settlement deadline will revert to the 12noon regular deadline.