The President of the Thailand Securities Depository Co., Ltd. (TSD), Mrs. Nongram Wongwanich, said that the preparation phase to shorten the clearing and settlement process from Transaction day + 3 days (T+3) to T+2 progressed at such speed that T+2 will become effective by 2005. The TSD has gathered all relevant parties to discuss possible impediments and solutions to shorten the clearing and settlement period. The parties participating in the discussion include the Association of Securities Companies (ASCO), the Association of Investment Management Companies (AIMC), and the Custodian Club.
“Shortening the clearing and settlement period from T+3 to T+2 will benefit all member companies, custodians, and investors in that it will help promote liquidity in the market whilst reducing the associated risks in clearing and settlement. This will also keep the Thai clearing and settlement process in line with international standards.
“The panel also agreed to provide an additional alternative to facilitate clearing and settlement for foreign custodians and investors. Foreign investors may now indicate that they would prefer that their securities certificates be kept in the scripless system through the issuers as well as with the securities companies and custodians. The scripless system will thus become almost universally used. The current usage level is 63% of the total securities certificates,” Mrs. Nongram said.
In addition to having a shortened clearing and settlement period, the confirmations of trading transactions will also become easier. Trading confirmations can be done by phone, fax, short message, or other electronic channels, e.g., emails and Internet. However, only the securities with an e-signature and effective data encryption will be authorized to do so. The securities companies which intend to use these new methods of confirmation will establish agreements between themselves and their customers.
The TSD president went on to say that: “The panel also approved the promotion of Electronic Fund Transfers (EFT) to reduce cheque usage while increasing the speed and efficiency of operations. Moreover, the related laws will be amended to help simplify the process and better prepare all parties for the shortening of the clearing and settlement period from T+3 to T+2.
“The TSD will liaison with all relevant parties and address all issues raised in the discussion. It is anticipated that the shortened period from T+3 to T+2 will be possible by early 2005 as scheduled,” she concluded.
