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CSDI LOOKS TO MOVE BEYOND T+3, REDUCING SETTLEMENT TIMES

Senior SEO official says preparations are underway to modernize market structure with new shortened settlement processing options for pre-and post-trade.

Looking beyond T+3, Central Securities Depository of Iran is now looking at ways to optimize and accelerate securities settlement to free up liquidity, reduce risk and improve straight-through processing.

Manager of Supervision on Exchanges Department at Securities and Exchange Organization of Iran, Mr. Mohsen Khodabakhsh broke the news, saying the transition process from trade date-plus-three days (T+3) to trade date-plus-two days (T+2) settlement has already initiated at Tehran Stock Exchange (TSE) and Iran Fara Bourse. In response to a question on why Iran Mercantile Exchange and Iran Energy Exchange are being excluded, Mr. Khodabakhsh said the nature of transactions at IME and IEE are totally different in nature.

Mr. Khodabakhsh who is in charge of monitoring exchanges at the SEO said, “Time increases the risk of an unpredictable event that could significantly affect the transfer of cash or ownership of securities from the point of execution through settlement.”

The senior SEO official concluded that the Organization is also considering transition to date-plus-one day (T+1). This represents an important step toward achieving even greater efficiencies for the industry.

Central Securities Depository of Iran (CSDI) expressed readiness to take steps to bring about necessary changes to the system and will begin to fully implement the T+2 settlement cycle as of February 4, 2018. The process would contribute CSDI to access delivery-versus-payment system (DvP) standard.

The post trade services are now to mitigate this time risk through actions including accelerated time to settlement and settlement optimization. Both would enable clients to further improve and speed workflows, optimize capital and lower risk and reduce settlement processing inefficiencies.

Release Date: 2/4/2018


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