As technological developments have enabled more rapid communications and practices improvement adopted by various Stock Exchange globally, one of the recommendations for Capital Market Development is to shorten settlement cycle. Currently, various European, Asian, and American Stock Exchanges have gradually begun to reduce their settlement cycle from T+3 to T+2.
Benefits expected from T+2 are settlement process efficiency, aligning with leading global settlement practices, enhance liquidity in the Market, enabling capital to be freed up faster for reinvestment, and mitigate systemic risk.
Indonesia Stock Exchange Settlement Cycle
Indonesia Stock Exchange Settlement after T+2 effective as follows :
Benefit of T+2
Settlement Process Efficiency
T+2 encourages market player to streamlines their settlement process, and lower operational cost in the long run.
Aligning with Leading Global Settlement Practices
Most of Global Exchanges from European, Asian, and American Market gradually begun to reduce their settlement cycle to T+2.
Enhance Liquidity in The Market
With shorter settlement cycle, securities that investor purchased can be resold in less time.
Enabling Capital to be Freed Up Faster for Reinvestment
With shorter settlement cycle, Seller will also receive funds one day sooner, realize gains faster, and it also make investor easier to switch investment to other securities.
Reduction of Counterparty and Market Risks
The longer the settlement time, the greater the risk that both parties exposed. Shortening Settlement Cycle also will help to mitigate market risk and reduce risk exposure between transacting parties and the Clearing House itself.