The Depository Trust and Clearing Corporation (DTCC) recently polled 116 of its clients in the Asia Pacific region about their readiness for the move to T+2 settlement regime in Australia, which is currently planned for 7 March 2016 by the ASX.
New Zealand will make the move to T+2 at the same time as Australia. Singapore and Vietnam will also move to T+2 settlements in 2016, while Japan is likely to adopt the new standard in 2018 or 2019.
The US Securities and Exchange Commission has expressed its willingness to move towards a T+2 regime in 2017.
Asked whether they felt they were “adequately informed about the change to T+2 in Australia, New Zealand, Singapore and the US”, 45 per cent of respondents in the DTCC survey replied no.
Furthermore, 60.3 per cent of respondents said that managing parties and processes across time zones would be the greatest post-trade operational ‘pain point’ in the transition to T+2.
Forty-two per cent of respondents said they have “just started” to make changes to accommodate T+2 in the Asia Pacific and/or the US, and 30 per cent said they have not started preparations.
Matthew Chan, who is global head of strategy and Asia Pacific industry relations at DTCC subsidiary Omgeo, said the poll responses indicate there is “room for improvement” on readiness ahead of Australia’s transition to T+2.
“Almost half respondents throughout the region don’t feel completely up to speed on the various moves to T+2 taking place in the region,” Mr Chan said.
“Each market will have different nuances, and each market is handling the transition in a different way.”
However he said the ASX has taken a “very structured and consultative approach to T+2” and has set a “high standard” in the Asia Pacific region.
“For Australian firms trading offshore, our time zone difference continues to be the biggest operational pain point,” Mr Chan said.
“Firms that don’t have a ‘follow the sun’ operational model will face back-office challenges. Firms trading into Australia will also contend with complexities associated with our time difference,” he said.
“Over 70 per cent [of respondents] have either only just started or are yet to start making changes to accommodate T+2 in the region and/or the US.
“We believe that Australian firms are amongst the most prepared for local implementation of T+2, but looking at the region as a whole there is a vast majority lagging in terms of general T+2 readiness, which is a concern,” Mr Chan said.
