The T+2 settlement regime reduces the settlement period from a T+3 cycle, the ASX said.
“The move to T+2 settlement is an important milestone in improving the efficiency and competitiveness of the Australian market, and delivers genuine benefits for participants and investors,” said ASX deputy chief executive Peter Hiom.
According to the ASX, T+2 lowers systematic risk for the market by reducing counter-party risk for investors, participants and clearing houses.
Stockbrokers Association of Australia chief executive Andrew Green has supported the move to T+2.
“T+2 gives Australia a significant competitive advantage at a time when global investors are yearning for confidence, transparency and certainty,” Mr Green said.
Moreover, Australian Custodial Services Association (ACSA) chair Mark Wooton reinforced that the move is positive and “puts Australian in line with a number of other global markets”.
T+2 settlement already operates in Europe and Hong Kong, with the US and Canada having proposed moving to T+2 in September 2017.
The Australian custody industry began testing the regime in August 2015, with many participants already having tested their readiness for the system.
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