Countries in North America – the USA, Canada and Mexico – are set to transition to T+1 in late May 2024, while India has been operating on T+1 since 2023, according to a recent report.

However, significant markets including the United Kingdom and those under European Securities and Markets Authority (ESMA) supervision are, like Australia, actively exploring shorter settlement cycles, finds an industry whitepaper published by the Australian Securities Exchange (ASX) aimed at advancing the discussion on the potential move from T+2 to T+1 settlement in Australia and inviting industry stakeholders to make submissions.

The publication of the whitepaper, the ASX notes, follows the establishment of the T+1 Working Group that was formed by the ASX Business Committee in December 2023 and comprised of industry experts who have provided input into the preparation of the T+1 whitepaper.

The paper outlines how Australia's unique market structure, size, time zone, investment flows and trading activity necessitates careful industry consideration of the risks, benefits and costs of transitioning to T+1. 

“In putting together this whitepaper, we recognize there are various factors that will impact a decision to transition to T+1,” says Clive Triance, ASX Group executive for securities and payments. “This includes the type of service an entity provides, its own project pipeline, the cost and resourcing involved, along with potential implementation risks.

“Of course, this is weighed up against the potential benefit of a prompt implementation through harmonization of settlement and funding cycles with other leading global markets.”