The Securities Clearing Corporation of the Philippines, wholly-owned subsidiary of the Philippine Stock Exchange Inc., has migrated to a shortened settlement cycle of only two days.
This is a significant advancement in the domestic capital market that aligns the Philippines with the 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.
“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 also serves as president and CEO of SCCP.
Preparations for the T+2 migration started immediately after the March 27 implementation of the new clearing and settlement system 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 Corp. all 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.
On 10 August, the SCCP received Securities and Exchange Commission approval for the request to migrate to the T+2 settlement cycle on 24 August.
The launch of the T+2 settlement cycle will reduce various risks of unsettled trades under the T+3 regime and promote more efficiencies in Philippine capital market.
“Aside from aligning the settlement with major international markets, we expect the market participants will soon experience the benefits of operating in a T+2 environment,” Monzon said.
On 29 August, the SCCP settled two batches of trades where the first batch comprised of the last T+3 trades executed on 23 August and the second batch comprised of the first T+2 trades which were executed on 24 August. All transactions were settled before their respective settlement deadlines.
Subsequent settlements until 4 September were done before 1pm, the extended settlement deadline in effect until 11 September. Starting 12 September, the settlement deadline will revert to the regular 12 noon deadline.
