Securities market operations to improve with T+1 settlement: NCCPL

January 17, 2024 (MLN): The transition to a shorter settlement cycle of T+1 from the existing T+2 settlement cycle will add significantly towards further enhancing the efficiency of the securities market operations and lead to its alignment with the best practices, according to a notice issued by the National Clearing Company of Pakistan on Tuesday.

NCCPL shared its vision for the transition to a shorter settlement cycle of T+1 from the existing T+2 settlement cycle. Further, all the concerned stakeholders were requested to share their views and recommendations on the proposed transition to shorter settlement cycle with NCCPL.

In this regard, NCCPL has not received recommendations and comments from the majority of the stakeholders.

“You would agree that any such transition will have a significant impact on the operational and technical landscape of our securities market and at the same time such change could not be withheld for a long period to ensure compatibility with the regional / global capital markets,” it added.

NCCPL is confident that the transition to a shorter settlement cycle can be handled efficiently at its end.

However, close coordination and collaboration with all concerned stakeholders are essential to highlight any obstacles that are anticipated to hinder implementation of a shorter settlement cycle and to determine a way forward for overcoming them to ensure a swift transition.

NCCPL on its part, has reached out to a limited audience through different forums to gather information regarding the perceived impact of transition to a shorter settlement cycle from T+2 to T+1.

Accordingly, it came across various matters that need to be deliberated and resolved before its implementation such as time available for non-exchange transaction affirmation process to Custodian Clearing Members, operating hours of leverage markets, mark-to-market loss collection and disbursement for ready/ derivative contract, etc.

Further, NCCPL, in order to facilitate market participants, also conducted an awareness session on the T+1 settlement cycle on January 15, 2024, in the PSX auditorium. NCCPL shall also conduct separate sessions with foreign custodian banks.

It will also demonstrate the entity’s strong commitment and capability to adapt ever-transforming global service benchmarks to foreign investors and securities markets.

Therefore, a collective and sincere effort is expected from all concerned stakeholders to achieve this objective.

“It may please be noted that the prescribed timeline will be strictly observed as NCCPL intends to initiate a pilot run of the T+1 settlement cycle by April 15, 2024,” the notice further reads.

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