PAKISTAN: NCCPL to Shorten Settlement Cycle to T+1

Tuesday September 12 2023

On 11^th September 2023, the National Clearing Company of Pakistan Limited (NCCPL) announced that it is evaluating the practicability of shifting from T+2 to T+1 settlement cycle. NCCPL is confident that transition to a shorter settlement cycle can be handled efficiently in close coordination and collaboration with concerned stakeholders.

NCCPL do not foresee any major obstacle at its end in the implementation of shorter settlement cycle, however, it will significantly enhance the operational efficiency related requirement for Custodian Clearing Members (CCMs) that are responsible for settling majority of the trades executed in the securities market by the foreign individual and institutional investors.

The CCMs use Institutional Delivery System (IDS) functionality to affirm the trades till T+1 and existing T+2 settlement cycle is conducive due to different time zone. Additionally, forex spot market in Pakistan has its own settlement timing and mechanism which is presumably more aligned with T+2 settlement cycle.

NCCPL has envisaged that National Clearing and Settlement System (NCSS) is capable to handle settlement on T+1 basis, however, considering the significance of this project a thorough study needs to be carried out to review, highlight, document and decide on all allied matters.

NCCPL, in order to start the process, is reaching out to all concerned stakeholders to solicit their views and recommendation on the proposed shortening of settlement cycle. It is also proposed that a working group comprising of representative from the infrastructure institutions, brokerage, banking, and non-banking financial institutions and CCMs be formed to conduct the said study and provide its recommendations and a roadmap for implementation.

Click on the above link for further information