ASIFMA-DTCC’s Joint Webinar 2022
ASIFMA & DTCC Joint Webinar 2022
Accelerated Settlement Cycles and DVP – the Path Forward for Asia
Asian markets have been harmonizing toward the international standard of a T+2 settlement cycle in recent years to attract more investment into Asia, with Indonesia, Malaysia and Singapore now harmonized to T+2. The Philippines is exploring its own migration as well towards T+2.
The China A share market requiring predelivery and prefunding amidst a unique T0/T1 settlement cycle had been a sole outlier and remains to be of concern for global investors. Broker financing via the Connect Scheme between Shanghai/Shenzhen/Hong Kong has helped intermediate trading frictions for global investors and enhanced frameworks to improve the settlement process by both Chinaclear (for DVP) and by HKEX (for Synapse) is underway. Meanwhile, with the announcement to shorten its settlement cycle from the international standard of T+2 to T+1 starting in 2024, India has followed suit with its own migration to T+1, but two years ahead of the US schedule.
This panel aims raise awareness around DVP and settlement cycles with particular focus on the US and China, the challenges and opportunities, and to explore trends and implications.
|09:00 – 09:05||Opening and Welcome Remarks|
|09:05 – 09:35||US T+1: What it means for Asia?
As times equals risk in financial markets, the longer it takes to settle a trade, the greater the possibility of a counterparty failing to meet its obligation. Shortening the settlement cycle thus offers the opportunity to further safeguard investors’ interests and protect the stability of financial markets. The planned transition of the US to T+1 by 2024 will require modifying industry practices, enhancing processes and technology and facilitating behavior change.
|09:35 – 10:20||Panel Discussion: China – Prefunding, Pre-Delivery, DVP and Optimal Settlement Cycles?
Challenges of China T0/T1 settlement cycle – Accessing the China A share market via the QFII channel has the challenging requirement for predelivery and prefunding amidst a unique T0/T1 settlement cycle. The Connect Scheme between Shanghai/Shenzhen/HK has enjoyed huge success with twice the volume of China A share trading vs the traditional QFII channel, with HK brokers providing financing to simulate DVP for investors. But both channels are now on the move: China Clear has announced DVP reforms to take effect by yearend. HKEX is also about to upgrade the Connect Scheme by employing new technology to further automate clearance and settlement via smart contracts.
What are the implications to investors, custodians and brokers?
|10:20-10:25||Webinar closing remarks|