SGX to Launch New Securities Settlement & Depository System

The new framework will reduce SGX’s settlement cycle down to two days.

The Singapore Exchange (SGX) announced today that it will be launching a new securities settlement and depository framework and system next month on December 10, 2018, to meet global standards.

The system currently used by the SGX has a securities settlement cycle of three days (T+3). However, the new framework will reduce this settlement cycle down to two days (T+2) and allow the simultaneous settlement of money and securities.

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Making this change will harmonize Singapore’s stock market with other global markets such as Australia, the European Union, the United States, and Hong Kong, the statement says. Investors can also expect further improvements such as the streamlining of Central Depository Pte Ltd (CDP) notifications.

Chew Sutat the Executive Vice President and Head of Equities and Fixed Income at SGX.
Chew Sutat
Source: LinkedIn

“Come 10 December, we will align our securities clearing and settlement processes with global standards, strengthening Singapore’s position as an international financial centre,” said Chew Sutat, the Executive Vice President and Head of Equities and Fixed Income at SGX.

“With the new settlement and depository framework, securities and funds will be made available to investors earlier, while reducing risks across systems and markets. Our new system will also enable us and our securities members to enhance services for the market.”

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The new settlement and depository system also offers some perks for brokers. Specifically, the system will facilitate a broker-linked balance functionality which will be made available to traders.

This means investors will be able to choose their preferred brokers, giving them more visibility over specific securities. As a result, brokers will be able to offer more personalized products and services to their customers.

MAS, SGX, and partners developed DvP capabilities for the settlement of tokenized assets

The announcement from SGX follows on the heels of the Monetary Authority of Singapore (MAS), SGX and partners revealing that they have developed Delivery versus Payment (DvP) capabilities for the settlement of tokenized assets across various blockchain platforms.

This collaboration with Anquan, Deloitte, and Nasdaq is one of the two spin-offs of Project Ubin, an industry collaboration to determine whether distributed ledger technology (DLT) can be used to clear and settle payments and securities.

As Finance Magnates reported yesterday, the development of these capabilities will support the simplification of post-trade processes and shorten settlement cycles.

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