Jamaica Stock Exchange Announces Major Changes to Settlement Cycle and Trading Hours

The Jamaica Stock Exchange (JSE) has officially announced significant adjustments to its Settlement Cycle and Trading Hours, set to commence on Monday, May 27, 2024. These changes come after six months of extensive consultations and planning with stakeholders, including a final meeting with brokers and listed companies.

Starting May 27, the Settlement Cycle for transactions on the JSE will be reduced from T+2 (Trading plus two additional business days) to T+1 (one business day after trading). This move aims to enhance market efficiency and align with global best practices. Additionally, the trading hours will be extended from the current 3 ½ hours to 5 hours, with trading now beginning at 9:00 a.m. and closing at 2:00 p.m.

Dr. Marlene Street Forrest, Managing Director of the Jamaica Stock Exchange, emphasized the importance of these changes in improving market conditions for investors. “We want to inform our members about the measures the JSE and the Jamaica Central Securities Depository (JCSD) are taking to improve the market for the benefit of investors, reduce market risks, and enhance market activities and liquidity,” said Dr. Street Forrest. She highlighted the JSE’s commitment to responding to the needs of investors, listed companies, brokers, and other stakeholders to foster market growth and competitiveness.

The transition to a T+1 Settlement Cycle involves significant adjustments to the JSE’s rules, impacting how information is provided by listed companies and member/dealers. Dr. Street Forrest assured the financial community that these changes are in their best interests and are aimed at promoting a more efficient and liquid market.

Details on T+1 Implementation

Mrs. Althea Daley of the JCSD provided further insights into the implementation of the T+1 Settlement Cycle. She explained that the Settlement Cycle is the period required to finalize a trade and deliver funds and securities. Under the T+1 Settlement Cycle, trades will be finalized on the next business day following the trade date.

Key changes highlighted by Mrs. Daley include:

• Trades will be finalized one day after the trade date.
• Member/Dealers will pay and receive payment for securities one day after trading, on behalf of themselves or clients.
• The JCSD will act as an intermediary in all transactions to ensure payment and delivery.
• Investors should not be impacted as the requirement to fund their accounts with Member/Dealers remains unchanged.
• Shares traded can be pledged on T+1.

Benefits of T+1 Settlement Cycle

Mrs. Daley emphasized several advantages of moving to a T+1 Settlement Cycle:

• Alignment with major international markets such as the USA and Canada.
• Faster receipt of cash/securities for investors.
• Reduction of credit and settlement risk for the JCSD.
• Improvements in operational processes.
• Increased market liquidity.
• Reduced Foreign Exchange risk in USD transactions.

Changes for Listed Companies

With the new changes, listed companies will also experience adjustments:

• Listing ceremonies will now occur at 8:30 a.m. instead of 9:00 a.m.
• News releases to the market will be issued after 2:00 p.m. and before 8:30 a.m.
• The ex-date and the record date will be the same.

The JSE believes these changes will enhance the market’s efficiency, reduce risks, and provide better service to all stakeholders, ultimately fostering a more robust and dynamic trading environment.

See BATV previous article on T+1 Settlement Cycle : Here