Saudi exchange completes switch to T+2

The Saudi Arabian Stock Exchange has formally moved from a T+3 to T+2 settlement cycle for listed securities.
By Paul Walsh
The Saudi Arabian Stock Exchange (Tadawul) has begun using a T+2 settlement cycle for listed securities.

Tadawul has said all necessary pilot phases have been completed in order to “ensure full readiness and connectivity with market participants.”

The move is aimed at increasing the level of asset safety for investors as well as aligning the Saudi market with international best practice.

In addition, it is hoped a shorter cycle will create an environment to promote greater institutional investment.

Tadawul published draft rules in January for the implementation of a T+2 cycle with a focus on adopting a delivery versus payment (DVP) system including the segregation of custody and settlement and covered short selling.

Included within the rules is the requirement for all brokers that are exchange members to become custody members of the new securities depository centre.

Tadawul’s switch to T+2 is the latest move following a number of other countries’ attempts to shorten settlement cycles.

Earlier this month the Securities and Exchange Commission (SEC) adopted an amendment to shorten the standard settlement cycle for most broker-dealer securities to two business days in the US.

The SEC is targeting 5 September as an implementation date.

The Stock Exchange of Thailand (SET) also revealed it will shorten its settlement cycle to T+2 from March 2018.