Road to T+2 Settlement Cycle Awareness to Market Participant INDONESIA STOCK EXCHANGE 18 July 2018
Global Exchanges Practices Already Implement T+2 Settlement Cycle Planned to T+2 Europe Asia-Pacific Middle East America Country United Kingdom India (2003) Saudi Arabia (23 Apr 17) US (5 Sep 2017) Malaysia (Q3 2018*) Switzerland Pakistan (2007) Iran (6 Feb 18) Canada (5 Sep 2017) Indonesia (26 Nov 18) Iceland Taiwan (2 Feb 2009) Mexico (5 Sep 2017) Singapore (3 Dec 18*) EU (2014) Hong Kong (2011) Argentina (5 Sep 2017) Japan (16 Jul 2019) South Korea (2012) Peru (5 Sep 2017) Brazil (TBA) Russia (2013) Bermuda (23 Oct 17) Vietnam (1 Jan 2016) Jamaica (11 Dec 2017) Australia (7 Mar 2016) NZ (7 Mar 2016) Thailand (2 Mar 2018) * Tentative Information from various sources (Exchange / Data Vendor / Media)
Background Background and Purposes 1. Global Exchanges trends shift to shorter settlement cycle (T+2) 2. Technological advancements and rapid communication have enables shorter time needed for settlement Purposes 1. Aligning with leading global settlement practices 2. Settlement process efficiency 3. Enhance liquidity in the Market and faster capital turn over for reinvestment
What we have done so far No. Activity Date 1. T+2 Readiness Questionaire (Brokers, Custodian, Payment Bank) 11 Mar 2016 2. T+2 Focus Group Discussion with Market Participant 31 May 2016 3. SRO and BOFIS System Assessment with System Dev 21 Mar 2017 4. Brokers and Custodian Bank System Control Self Assessment 14 Apr 2017 5. OJK Year-End Press Release : T+2 Implementation Plan 29 Dec 2017 6. Discussion with ASIFMA and Foreign Institutional Client 10 Apr 2018 7. Institutional Client Readiness Survey 20 Apr 2018 8. Working Group Discussion Market Participant, System Dev, and OJK 25 Apr 2018 9. OJK Approval of T+2 Implementation Date 21 Jun 2018 10. SRO Formal Announcement : T+2 on 26 November 2018 28 Jun 2018
T+2 Milestone 2018 JATS INET Implementation C-BEST Next G Implementation T+2 Implementation EAE e-clears Implementation Participant Sys Adjustment Regulation Readiness Clean Mock & Pre Live June 2018 Aug 2018 Oct 2018 May 2018 Jul 2018 Sep 2018 26 Nov 2018 T+2 Public Announcement SRO System T+2 Readiness Participant System Readiness Participant Preparation Industry Wide Testing Phase Finished Ongoing
System Deploy T+2 Implementation 26 November 2018 Target Date Net Settlement 23 and 26 Nov T+3 Last Day 23 Fri CRL 23 Nov Date Friday, 23 November 2018 Saturday, 24 November 2018 Monday, 26 November 2018 24-25 Sat - Sun T+2 First Day Settlement Day 26 Mon Net CRL 23 dan 26 Nov 27 Tue Prematching Settlement Inst. Activity 28 Wed 1. Last trading day with T+3 settlement cycle. 2. SRO, EM, CB perform system deploy at the end of the day Pre Live Test for SRO, Exchange Member, and Custodian Bank 1. First trading day with T+2 settlement cycle 2. KPEI issued net CRL of 23 and 26 Nov 2018 transactions 29 Thu Wednesday, 28 November 2018 1. First settlement day with T+2 settlement cycle 2. Merged Settlement of 23 and 26 Nov 2018 transactions
Net CRL Simulation (Settlement Day 28 Nov) Fri, 23 Nov 2018 - Last Day T+3 Mon, 26 Nov 2018 - First Day T+2 Trade Execution Trade Execution Client S/B Sec Vol Price Val Client S/B Sec Vol Price Val A Buy AAAA 500 8,000-4,000,000 A Sell AAAA -200 8,000 1,600,000 B Sell AAAA -400 8,100 3,240,000 B Buy BBBB 500 4,000-2,000,000 Client Level CRL Client S/B Sec Vol Price Val A Buy AAAA 500 8,000-4,000,000 B Sell AAAA -400 8,100 3,240,000 Client Level CRL - Netting Client S/B Sec Vol Price Val A Buy AAAA 300 8,000-2,400,000 B Sell AAAA -400 8,100 B Buy BBBB 500 4,000 1,240,000 Clearing Member Level CRL Deliver/Receive Sec Vol Val Receive AAAA 100-760,000 (Obligation)/Right -760,000 Clearing Member Level CRL- Netting Deliver/Receive Sec Vol Val Deliver AAAA -100 840,000 Receive BBBB 500-2,000,000 (Obligation)/Right -1,160,000
T+2 Cut-off Time Seq Process Side Guidelines T+0 T+1 T+2 1 Order Entry & Execution for RG Market Client, AB 08:45-16:15 2 Order Entry & Execution for TN Market Client, AB 3 Order Entry & Execution for NG Market Client, AB 4 Trading ID Correction for RG Market AB, BEI 5 Trading ID Correction for TN Market AB, BEI 6 Trading ID and Transaction Correction for NG AB, BEI 09:00-12:00 09:00-16:15 08:45-16:20 09:00-12:05 09:00-16:20 7 Exchange Transaction Data Delivery BEI, AB 8 Clearing Result Delivery for RG and NG Market KPEI, AK 16:20-17:30 16:20-19:30 9 Clearing Result Delivery for TN Market KPEI, AK 12:45 10 Trade Confirmation Delivery to Client AB, Client 23:59 11 Allocation, Confirmation, Affirmation Client, BK, AB 12 Pre Matching, Post Trade Process AB, BK, KSEI 13 SLB Request to KPEI AB, KPEI 14 Bank Intraday Facility AB, Bank 15 Obligation of Delivery RG Market (KPEI) AB, KPEI 16 Obligation of Delivery TN Market (KPEI) AB, KPEI 17 Book Entry Exchange Settlement AB, KPEI, KSEI 12:00-13:00 23:59 23:59 09:00 12:15 and 16:00 17:00 17:00 12:15 12:15 11:30 12:15 12:15 06:00-13:30
Corporate Action on Transition Date T+2 Transition Date T+3 Last Day T+2 First Day Settlement Day 23 Fri 24-25 Sat - Sun 26 Mon 27 Tue 28 Wed 29 Thu Explanation To avoid any complexity and adjustment in Market Participant s System, SRO decided that there will be no Recording Date on T+2 Transition Date (26, 27, 28 November 2018). Recording Date will be scheduled normally again on 29 November 2018. Corporate Action Affected 1. Right Issue 4. Stock Dividend 2. Cash Dividend 5. Bonus Issue 3. Interim Cash Dividend
Things need to be considered Commitment Awareness Support and commitment from all stakeholder is mandatory to ensure seamless implementation Market Participants should inform to every of their Client extensively System Adjustment Settlement Instruction All stakeholders are expected to make preparation and adjustment of their system for T+2 Utilize KSEI prematching module and release settlement instruction earlier (T+1) to allow timely settlement
Contact proyek.t2@idx.co.id unit.eku@kpei.co.id pt@ksei.co.id