Colombia is planning to shorten its settlement cycle by a day to T+2, bringing it in line with other major markets in the region.
The Colombian central counterparty (CCP), Cámara de Riesgo Central de Contraparte, announced it will migrate the clearing and settlement of the equities market from September 2019.
The move will bring it in line with other Latin American (LATAM) markets that have already made the transition, including Mexcio, Chile and Peru, as well as Brazil which will be making the switch in the second quarter of this year.
“We think that this will not be a very difficult transition considering that investors in the region have already had to align their processes in order to accommodate to a T+2 cycle in the other LATAM markets where they invest,” said Claudia Calderon, head of Hispanic LATAM, BNP Paribas Securities Services.
With a shortened settlement cycle, trade allocation at the final beneficiary owner level will reduce to T+1 basis for pre-matching purposes.
Similarly, Calderon adds local brokers and custodians will also need to adjust their processes to the new cycle in order to ensure a smooth transition.
“The positive aspects of this change is the reduction of counterparty risk considering also that all the equities trades will settle through the CCP,” Calderon added.