South Africa in T+3 settlement launch

The T+3 initiative will replace the existing T+5 settlement cycle
By Paul Walsh
The Johannesburg Stock Exchange (JSE) has successfully launched a shorter settlement cycle known as T+3.

All equities will now be delivered in exchange for payment in four days replacing the previous six-day cycle (T+5) and sees the South African market align with international best practice settlement standards.

“This is a major milestone for our country and our capital markets. The alignment with global standards will increase interest from global investors who constitute more than a third of our equity market volumes,” said Dr Leila Fourie, executive director at the JSE.

“Coupled with this, the move to a shorter T+3 settlement cycle will significantly reduce the number of unsettled trades at any given point.”

First initiated in 2013, the T+3 project has undergone a three-phase process which took place at national level and involved multiple test runs with market participants.

The project was fronted by JSE in collaboration with the South African Reserve Bank, National Treasury and Financial Services Board.

“The move to a shorter settlement cycle is a major achievement for the JSE and South African capital markets at large,” said Cuthbert Chanetsa, deputy executive officer, investment institutions at the Financial Services Board.

“From a regulatory perspective, this brings South Africa’s capital markets in line with global best practice as recommended by the International Organisation of Securities Commissions and will help in the mitigation of both systemic and settlement risk.”