The Philippine Stock Exchange (PSE) reported that its wholly-owned subsidiary, Securities Clearing Corporation of the Philippines (SCCP), has successfully migrated to a shortened settlement cycle of 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 in a statement.
Preparations for the T+2 migration started immediately after the March 27, 2023 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 Corporation took part in working group discussions, readiness activities and testing sessions over a five-month period, to ensure that the market was ready for a T+2 settlement cycle.
Last Aug. 10, SCCP received the approval of the Securities and Exchange Commission for its request to migrate to the T+2 settlement cycle on Aug. 24, 2023.
“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 concurrently serves as President and CEO of SCCP.
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 added.
On Aug. 29, SCCP settled two batches of trades where Batch 1 comprised of the last T+3 trades executed on Aug. 23 and Batch 2 comprised of the first T+2 trades which were executed on Aug. 24. All transactions were settled before their respective settlement deadlines.
Subsequent settlements until Sept. 4, 2023 were done before 1:00 p.m., the extended settlement deadline that is in effect until Sept. 11, 2023. Starting Sept. 12, the settlement deadline will revert to the 12:00 noon regular deadline.