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eliminated; it will be behind in
the headlines but possibly ahead
overall.
Similarly, the TSE has been tak-
ing a step-by-step approach. The
exchange, along with the Japan
Securities Clearing Corporation
(JSCC), established a working
“The T+2 project has been on our
minds, and we have been working
on it for 18 months. We think it is
time.”
PATARAVASEE SUVARNSORN, EXECUTIVE VICE
PRESIDENT, THE STOCK EXCHANGE OF THAILAND
group in 2015 to study T+2 and
make implementation recommen-
dations. A series of reports have
been published examining the
many operational changes that
will come with the transition and
outlining the way forward. Early
2019 has been set as the target for
T+2 in Japan.
“For a lot of exchanges, it is not
just about the settlement cycle,”
says O’Brien. “For Singapore, it is
part of a larger change. Bits and
pieces in addition to T+2.”
It appears as though Singapore
will complete the process of T+2
and the various other improve-
ments by the end of 2018. Feed-
back to the consultation paper
has been positive. Some concerns
have been raised by contra traders,
investors who get in and out of
stocks before payment is due,
although speculators of this sort
are already adequately covered by
credit arrangements with brokers,
arrangements that can enable the
72 // TheTrade // Spring 2018
same sort of short-term opportunities available in a
T+3 environment.
Shifting dynamics
It is important to recognise that Thailand’s early move
may be a sign of shifts in regional dynamics, as much
an indicator of Thailand’s strengths as a simple matter
of timing. Over the past few years, the SET has gone
from just another regional exchange, largely eclipsed
by the likes of Singapore and Hong Kong, to a leader
in its own right. It has been focusing on upgrading
its systems and capturing Mekong area business to
become a preferred hub for equity. T+2 is part of the
makeover and the project has been approached with
the foresight and professionalism of a major market.
“We have been planning for more than a year, testing
with the market and working with the custodian
banks. So far, we are OK. No major problems,” Patara-
vasee said a month ahead of the move.
In terms of the actual transition in Asia, observers
are confident it will go well. On the market side, they
see good preparation. On the customer and client side,
they see experience, having gone through the process
already in Europe, the US and Australia. Very few links
in the value chain will have to be upgraded, for the
most part just processes and systems tested and ad-
justed. The checkerboard in Asia, with some exchang-
es T+2 and others still at T+3, is also seen as little more
than another variation for participants to monitor.
“It is a non-event for them. It is an alignment they
have seen coming,” says SGX’s Torchetti. “The pro-
cesses have already been established in other markets
regionally. They are basically best practices globally.”
“I don’t think it increases risk. It takes risk out,” he
adds.
The one possible concern is the actual changeover
itself. Given the overlap of the new cycle and the old,
exposures could be greatly increased for a short period
of time, and participants need to be prepared for that.
But following that tense day, it should be business as
usual.
“The shorter settlement cycle puts more pressure to
get funding into place. One of the key risks as the mar-
ket moves is the first settlement date. There needs to be
a lot of focus,” says O’Brien. “Operational and treasury
departments must be focused on that day. But it quickly
gets back to business as usual after that point.”