Securities Financing Regulation News | Japan reserves Q2 2019 for Q + 2 rule change
Japan has unveiled a “provisional” timetable for the transition of its trade from a T + 3 to T + 2 settlement cycle, with a view to Q2 2019.
The implementation date will be determined by mid-2018 and is subject to change due to discussions with market players and “other matters”.
Exchanges within the scope include Tokyo Stock Exchange, Osaka Stock Exchange, Nagoya Stock Exchange, Fukuoka Stock Exchange, and Sapporo Stock Exchange.
SBI Japannext and Chi-X Japan will also shorten their cycles based on these exchanges.
The decision to shorten the cycle is based on a report by the Japanese task force on the possibility of a shorter settlement cycle released in June 2016.
In a statement on the initial timetable, the Japan Exchange Group said, “This decision was taken in recognition of the urgency and importance of establishing a safe and efficient securities settlement system to improve the international competitiveness of the Japanese securities market. ”
He added: “The interim implementation period is scheduled for April or May 2019, as described in the final report.”
A move to T + 2 has the advantage of bringing Japan in line with the main American and European markets, among others.
North American equity markets reduced their settlement cycles from T + 3 to T + 2 on September 5.
Relevant securities include corporate and municipal stocks and bonds, as well as unitary investment fund (UIT) transactions in the United States, Canada and Mexico, Peru and Argentina.
The EU moved to a T + 2 regulation cycle in 2014.
The transition aims to reduce operational and systemic risks by forcing securities more quickly through the market infrastructure, thereby enabling counterparties to avoid trade failures.