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T+2 Settlement Timeframes Key to Reducing Risk Exposures and Increasing Resilience within Australian Equities Markets

GBST Launches ‘Introducing T+2 for the Australian Equities Market’ White Paper in Conjunction with Stockbrokers Association of Australia 

GBST (ASX:GBT), the ASX-listed wealth management and broking technology specialist, in conjunction with the Stockbrokers Association of Australia, today announces a new white paper, “Introducing T+2 for the Australian Equities Market” detailing the benefits of introducing shorter equities settlement timeframes in Australia. The benefits of implementing a T + 2 settlement regime include a reduction in risk exposures, increase in market liquidity and further alignment of the Australian market with international best practice.

With GBST having set the benchmark for broking technology, and its GBST Shares platform in use today by over 65 percent of the Australian equities market by volume, the white paper further details expert recommendations. These include advice for industry to expect technology changes to streamline post-trade processing for institutional brokers and more efficient methods of collecting funds for retail brokers.

Denis Orrock, Chief Executive, GBST Capital Markets said: “There are significant operational and cost efficiencies for the market under a T+2 model and in terms of regulatory capital requirements, we can expect to see reductions in covering counterparty risk. The key here in the success of T+2 is the implementation of best practice standards and real-time communications mechanisms such as Electronic Trade Confirmation (ETC) systems in an integrated middle to back office platform.”

The white paper also details an analysis of an industry participant’s relative difference in exposure under a T+2 model over a 15 day period. The analysis reveals that a T+2 cycle would reduce the exposure subject to margin by approximately 30 percent, when compared to a T+3 cycle.

David Horsfield, Managing Director and Chief Executive Officer of the Stockbrokers Association of Australia said: “While the move to T+2 is not without challenges for stockbrokers and their clients, the white paper findings support positive outcomes for industry in moving to a T+2 settlement cycle. It will also enable a more streamlined settlement cycle with our EU and Asian financial market counterparts. Already Hong Kong, Taiwan and Korean markets trade in T+2, whilst China’s equity market participants trade in T+1. It is imperative that the Australian financial marketplace keeps pace with overseas trends.”