The Johannesburg Stock Exchange has settled its first T+3 settlement cycle with no failed or “rolled” trades, thus confirming a successful implementation of the T+3 project.
On Monday 11 July, South Africa’s financial markets went live with a shorter three-day settlement cycle, (referred to as T+3) to align the South African market with international best practice settlement standards.
The JSE had initially anticipated that between 5 and 10 percent of trades would roll in the new environment (a rate already lower than international benchmarks). The achievement of a zero roll rate is significant, and speaks to the rigour with which the new settlement cycle was implemented and adopted across the market.
Dr Leila Fourie, Executive Director at the JSE said:
We are ecstatic that our first T+3 settlement cycle has settled with no failed or rolled trades, a great collaborative achievement with all our market participants. A big thank you to everyone for their contribution. This achievement is a testament to the market commitment to seamlessly convert to a new settlement cycle.”
On the new T+3 settlement cycle, equities will be delivered in exchange for payment in four days (T+3 = Trade plus three days) versus the previous six-day time frame (or T+5 = Trade plus five days).
The alignment with global standards will increase interest from global investors who constitute more than a third of the JSE’s equity market volumes. The change will also significantly reduce the number of unsettled trades at any given point, substantially reducing the potential risks and losses between trading parties and enhancing investor protection.